As the ranking member of the Senate Budget Committee, Sen. Bernie Sanders (I-VT) has released a report that exposes Trump’s infrastructure plan as a scam designed to benefit Wall Street.
On June 7, 2017, Jason Easley writes on Politicus USA:
The report exposes how Trump’s infrastructure plan actually cuts infrastructure funding:
Under Trump’s proposal, billionaires on Wall Street, wealthy campaign contributors and even foreign governments would receive hundreds of billions in tax breaks to purchase our highways, airports and water treatment plants. They would then be allowed to impose huge new tolls and fees on the backs of American commuters and homeowners.
The reality is that Trump’s plan to sell off our nation’s highways, bridges and other vital infrastructure to Wall Street, private investors, and foreign governments is an old idea that does not work. Trump’s plan to rebuild America relies heavily on the use of public-private partnerships to finance infrastructure projects with private equity capital. Such financing, whether through private equity or traditional tax-exempt municipal bonds, is repaid by ordinary citizens through a combination of taxes
and user fees.
Private equity financing is markedly more expensive than traditional government financing, however – by as much as three to six times. Considering the scale of infrastructure development under consideration, that difference could be enormous. For example: the charge for a $100 million-dollar investment using traditional government bond financing (at 3 percent, over 30 years) is about $90 million. For private equity capital, at a 15 percent return, the total skyrockets to $450 million.
Trump’s infrastructure plan is to cut real infrastructure spending while giving tax cuts to corporations and billionaires so that they can buy the nation’s infrastructure and profit off of it with tolls and fees. Once the infrastructure is privatized, the new owners will be motivated to keep expenses down and profit up. The easiest way to accomplish this goal would be to spend less on the maintenance of roads and bridges while charging user fees to all.
Sen. Sanders said, “Donald Trump wants to hand over critical public infrastructure to private investors who will squeeze profits from the American people by putting up new tolls and exorbitant user fees. That is unacceptable. We shouldn’t be selling off our infrastructure to billionaires to make huge profits on the backs of working people.”
Trump’s plan is a con. Sen. Sanders and his report make an important point. While the Russia scandal consumes the bulk of the national spotlight, Trump is continuing his efforts to use the presidency to make the wealthiest Americans ever richer.
I think what is important to understand is that in the case of infrastructure, the actual physical assets are under the legal structures of utilities, authorities, or commissions, with ownership or control held by a wealthy ownership class or the politicians in power. Otherwise such assets are controlled by states and federal government, who rely on taxpayers to fund and maintain such assets.
In most cases the entities that own the utilities and other non-taxpayer-direct supported assets are individuals who have concentrated the ownership of the assets, and thus profits return to those who own.
There is no question that rebuilding and expanding our infrastructure is an effective way to both create jobs and address the rampant infrastructure problems that are accumulating in our country.
Such work needs to be taxpayer supported not financed whereby narrowly owned private companies are able to “steal” and own our utilities, highways, parks, etc.
Any “create jobs” justification is relatively short-term and does not position working people where they need to be in our future economy. There is MORE INCOME to be earned by workers through OWNING the companies (corporations) who are awarded the taxpayer-supported contracts to do the work. As a major component of Bernie Sanders initiative there must be included the stipulation that the companies bidding and ultimately awarded the contract work be EMPLOYEE OWNED. These companies can transform to employee-owned companies by structuring themselves using an Employee Stock Ownership Plan (ESOP), which Bernie Sanders supports. Already there are over 11,000 companies who are structured using an ESOP.
To fully understand and undertake this policy approach see http://www.cesj.org/learn/capital-homesteading/ch-vehicles/employee-stock-ownership-plans-esops/, http://www.cesj.org/learn/capital-homesteading/ch-vehicles/employee-stock-ownership-plans-esops/infrastructural-reforms-tax-incentives-encouraging-employee-stock-ownership-plans-esops/, http://www.cesj.org/resources/articles-index/whose-pie-and-why-esops/ and http://www.cesj.org/resources/articles-index/beyond-esop-steps-toward-tax-justice/
A concurrent solution that should be explored is to implement Citizens Land Banks (CLB), that are owned by the individuals they serve, thus broadening private ownership of income-producing power plants, utilities, toll roads and bridges and other infrastructure.
A CLB is a for-profit, professionally-managed, citizen-owned-and-governed community land planning and development enterprise, designed to enable every citizen of a community of any size to acquire a direct ownership stake in local land, natural resources and basic infrastructure.
A CLB is a social vehicle for every man, woman and child to gain, as a fundamental right of citizenship, a single lifetime, non-transferable ownership interest in all the Bank’s assets, share equally in property incomes from rentals and user fees from leases or use of the Bank’s assets, accumulate appreciated equity values from enhanced land values, and gain an owner’s voice in the governance of future land development.
A CLB is an innovative legal and financing tool empowered to borrow on behalf of all citizen-shareholders and service the debt with pre-tax dollars to meet the land acquisition, capitalization and operational needs of the Bank. The CLB shelters from taxation the equity accumulations of citizen-shareholders and protects the outside assets of the citizens in the event of loan default or if the enterprise fails.
A CLB is a social tool designed to encourage a just, free and non-monopolistic market economy. It applies the democratic principles of equal opportunity and equal access to the means to participate as an owner as well as a worker. It demonstrates that anything that can be owned by government can and should be owned, individually and jointly, by the citizens.
A CLB is a major feature in a proposed national economic agenda known as “Capital Homesteading for Every Citizen,” which is designed to reform existing monetary, credit and tax barriers to provide every American an equal opportunity to share in the governing powers and profits from new entrepreneurial ventures, new technologies, new structures, and new rentable space built upon the land. Capital Homesteading offers a “Just Third Way” of reversing unsustainable federal deficits and debt, and revitalizing and growing the American free enterprise system in a sustainable and environmentally sound way.
Support the Capital Homestead Act (aka Economic Democracy Act) at http://www.cesj.org/learn/capital-homesteading/, http://www.cesj.org/learn/capital-homesteading/capital-homestead-act-a-plan-for-getting-ownership-income-and-power-to-every-citizen/, http://www.cesj.org/learn/capital-homesteading/capital-homestead-act-summary/ and http://www.cesj.org/learn/capital-homesteading/ch-vehicles/.