“We will build new roads, and highways, and bridges, and airports, and tunnels, and railways all across our wonderful nation,” President Trump said in his inaugural address. On Monday, the administration attempted to make good on that promise by announcing what many in the media mistakenly called a “$1.5 trillion infrastructure plan.”
The initial ask from Congress is for $200 billion. Half that money would be used to expand digital networks ($20 billion), expand federal infrastructure loan programs ($20 billion), send block grants to states for rural projects ($50 billion), and a federal infrastructure revolving fund ($10 billion). That half of the plan would consist of straightforward appropriations that may be argued for or against on their merits.
The other $100 billion would be used to entice state and local governments to spend more on infrastructure. The feds would offer a four-to-one match—that is, for every four dollars the state or county or municipality spends, Washington offers an additional dollar. The White House claims this will result in $1.5 trillion spent on repairing and upgrading infrastructure.
Basing infrastructure on matching offers has not yielded sound results. First, like all federal matching programs, the president’s infrastructure plan would further distort state and local priorities. Regional governments find it extremely difficult to say “no” to federal offers of largess, and when Washington offers matching money for a certain project or program, the lower government will almost figure out a reason they should say “yes”—whether the project or program makes sense or not. In the case of infrastructure funding for states, for example, federal money is typically doled out at an 80/20 match: The state pays the full cost and receives an 80 percent reimbursement.
The problem is that only certain roads are eligible for federal funding. Over time, Washington’s generosity has encouraged states to devote too much in resources to federally eligible roads and not enough to ineligible ones. The Trump plan’s offer to bear 20 percent of the cost is less generous, but many governments would eagerly take the bait—and so further subject state and local priorities to those of faraway federal bureaucrats.
Another problem: In contrast to the 1950s and ’60s, when President Dwight Eisenhower’s interstate highway system was planned and constructed, federal infrastructure today comes with innumerable perverse and costly regulations. Federal law, for example, imposes wage restrictions requiring that workers on federally funded projects be paid at a certain rate or better. These and many similar regulations increase the costs of federally funded projects by as much as 30 percent.
It’s true that state and local governments shortchange their infrastructure needs. But that is a much larger problem than a convoluted federal incentive plan can solve. The federal government has enough decrepit buildings and highways to take care of without presuming to know which state and local ones need more money.
This post originally appeared on Weekly Standard