Larry Summers 'sees no merit' in Trump's $1 trillion infrastructure plan
In a Brookings Institution conference keynote on January 9, Harvard professor and former Treasury Secretary Lawrence Summers criticized President-elect Trump's infrastructure plan.
Trump plans to budget $1 trillion for highway, waterway, airport, and bridge projects. An estimated $140 billion in tax cuts could go to private sector investors as a way to finance those projects.
Though Summers advocates a large increase in infrastructure spending (in total, approximately 1% of the US GDP), he calls Trump's plan a "Potemkin village of nothing." Instead, he sees user fees, like highway tolls and congestion charges, as the most promising way to finance these projects.
Boosting infrastructure spending can lead to increased economic productivity and growth, Summers said. Well-functioning buses, subways, and bridges connect people, and thus result in more opportunities for commerce and keep business inside the US.
Summers stresses the need for maintenance and repairs on existing roads, bridges, mass transit, and schools. In an interview with Business Insider, Anthony Foxx, the outgoing Secretary of Transportation, also said highway and rail repairs should be a priority moving forward for the new administration. Many other experts say that Trump's private funding scheme (or, rather, vague promises on infrastructure investment) would not incentivize infrastructure repairs.
A lack of road maintenance, for instance, costs American drivers over $100 billion a year in extra repairs to their cars, Summers said. That's about $515 a year for the average driver, according to the 2015 study he cites.
Construction and re-construction projects are often either deferred or slowed due to ROI issues, costing taxpayers and the federal government more money over time too.
"I see no merit in the idea that using tax credits for private contractors to implement infrastructure investment will address any of these problems," Summers said.