Senate Democrats Unveil Stimulus 2.0. Price Tag: $1 Trillion

Matt Vespa
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Posted: Jan 24, 2017 4:05 PM
Senate Democrats Unveil Stimulus 2.0. Price Tag: $1 Trillion

Senate Democrats have unveiled Stimulus 2.0. With a price tag of $1 trillion, they say this program would create 15 million jobs and repair the areas that President Trump said were in a state of disrepair. Senate Republicans have pushed back, noting the similarities between this initiative and Obama’s 2009 plan that promised robust economic growth and plentiful jobs, a characterization that former President Obama disagreed with during his 2010 interview with Diane Sawyer. Still, it could put the GOP on a collision course with the White House (via AP):

Senate Democrats on Tuesday offered a plan to spend $1 trillion on transportation and other infrastructure projects over 10 years, challenging President Donald Trump to join them on an issue where they hope to find common ground.

Democrats estimate their plan would create 15 million jobs. The plan includes $210 billion to repair aging roads and bridges and another $200 billion for a "vital infrastructure fund" to pay for a variety of transportation projects of national significance.

An example of the types of projects that could be eligible for financing from the fund is the Gateway Program to repair and replace rail lines and tunnels between New York and New Jersey, some of which are over 100 years old and were damaged in Superstorm Sandy in 2012. The project, which would double the number of trains per hour using the tunnels and help enable high-speed Amtrak service, is estimated to cost about $20 billion.

Republican leaders, who have said previously that they're waiting for Trump to offer his own proposal, are unlikely to embrace the Democratic plan. It's not clear where Democrats would get the money for their proposal.

Infrastructure was raised at a meeting Monday between Trump and lawmakers from both parties. Senate Minority leader Chuck Schumer, D-N.Y., said Democrats pitched their plan to Trump and asked for his support. Schumer said he also warned Trump that doing so would mean he'd have to "go against" elements of the Republican Party. Trump acknowledged that and seemed open to working with Democrats, he said.

[…]

A proposal by two of Trump's financial advisers circulated just after the election calls for using $137 billion in tax credits to generate $1 trillion in private investment in infrastructure projects over 10 years. But investors are typically interested only in projects that have a revenue stream like tolls to produce a profit. Elaine Chao, Trump's nominee for transportation secretary, told senators last week that she wants to "unleash the potential" of private investors to boost transportation.

Senate Republicans say they will wait to see what the president proposes. Trump projected that his infrastructure plan would also be a $1 trillion dollar investment, though mostly through private sector financing—and he was also open to working with Democrats on this (via The Hill):

The proposal would offer $137 billion in federal tax credits to private investors who want to back transportation projects, which the blueprint says would unleash up to $1 trillion worth of infrastructure investment over 10 years.

[…]

“The Trump infrastructure plan features a major private sector, revenue neutral option to help finance a significant share of the nation’s infrastructure needs,” the outline says. “This innovative financing option would serve as a critical supplement to existing financing programs, public-private partnerships, Build America Bonds, and other prudent funding opportunities.”

[…]

Trump’s transition team said it was exploring whether to establish a national infrastructure bank, which has long been favored by Democrats but gone nowhere under a GOP-led Congress.

That talk shows his team is willing to explore new policy ideas — even Democratic ones.

In Congress, though, Republicans are leaning toward taxing corporate earnings that are stored abroad when that money returns to the U.S., a process called "repatriation," and using that revenue to pay for infrastructure spending.

We’ve all known for a while that Trump is a different Republican. He’s a populist, and he’ll do all that he can to get done what he feels is in the national interest—even if that means reaching across the aisle. We’ve seen this movie before though. The stimulus did not create mountains of jobs, just as the New Deal didn’t get America back to work. There is no education in the second kick of a mule, so I can see why GOP lawmakers are more than skeptical concerning this infrastructure initiative, especially the Democrats’ projection that it will create 15 million jobs.