Replies to post #261749 on Tornado Alley (PROG)

[PegnVA]

Excellent article.

[tinner]

More infrastructure, more stupid military spending all the while Flipper wants to cut taxes for fat cats............gives us more HUGE DEFICITS the CONS just LOVE and are known for! What else are they known for......nothing I can come up with.

[StephanieVanbryce]

Infrastructure Build or Privatization Scam?

November 19, 2016 9:26 am

Trumpists are touting the idea of a big infrastructure build, and some Democrats are making conciliatory noises about working with the new regime on that front. But remember who you’re dealing with: if you invest anything with this guy, be it money or reputation, you are at great risk of being scammed. So, what do we know about the Trump infrastructure plan, [ http://peternavarro.com/sitebuildercontent/sitebuilderfiles/infrastructurereport.pdf ] such as it is?

Crucially, it’s not a plan to borrow $1 trillion and spend it on much-needed projects — which would be the straightforward, obvious thing to do. It is, instead, supposed to involve having private investors do the work both of raising money and building the projects — with the aid of a huge tax credit that gives them back 82 percent of the equity they put in. To compensate for the small sliver of additional equity and the interest on their borrowing, the private investors then have to somehow make profits on the assets they end up owning.

You should immediately ask three questions about all of this.

First, why involve private investors at all? It’s not as if the federal government is having any trouble raising money — in fact, a large part of the justification for infrastructure investment is precisely that the government can borrow so cheaply. Why do we need private equity at all?

One answer might be that this way you avoid incurring additional public debt. But that’s just accounting confusion. Imagine that you’re building a toll road. If the government builds it, it ends up paying interest but gets the future revenue from the tolls. If it turns the project over to private investors, it avoids the interest cost — but also loses the future toll revenue. The government’s future cash flow is no better than it would have been if it borrowed directly, and worse if it strikes a bad deal, say because the investors have political connections.

Second, how is this kind of scheme supposed to finance investment that doesn’t produce a revenue stream? Toll roads are not the main thing we need right now; what about sewage systems, making up for deferred maintenance, and so on? You could bring in private investors by guaranteeing them future government money — say, paying rent in perpetuity for the use of a water system built by a private consortium. But this, even more than having someone else collect tolls, would simply be government borrowing through the back door — with much less transparency, and hence greater opportunities for giveaways to favored interests.

Third, how much of the investment thus financed would actually be investment that wouldn’t have taken place anyway? That is, how much “additionality” is there? Suppose that there’s a planned tunnel, which is clearly going to be built; but now it’s renamed the Trump Tunnel, the building and financing are carried out by private firms, and the future tolls and/or rent paid by the government go to those private interests. In that case we haven’t promoted investment at all, we’ve just in effect privatized a public asset — and given the buyers 82 percent of the purchase price in the form of a tax credit.

Again, all of these questions could be avoided by doing things the straightforward way: if you think we should build more infrastructure, then build more infrastructure, and never mind the complicated private equity/tax credits stuff. You could try to come up with some justification for the complexity of the scheme, but one simple answer would be that it’s not about investment, it’s about ripping off taxpayers. Is that implausible, given who we’re talking about?


http://krugman.blogs.nytimes.com/2016/11/19/infrastructure-build-or-privatization-scam/?module=BlogPost-Title&version=Blog%20Main&contentCollection=Opinion&action=Click&pgtype=Blogs®ion=Body

[BOREALIS]

Paul Krugman Warns of Unprecedented Trump Corruption to Come

By Hrafnkell Haraldsson on Mon, Nov 21st, 2016 at 11:07 am

"We're about to enter, or may already have entered, an era of corrupt governance unprecedented in U.S. history."

In a series of tweets this morning, Nobel laureate, economist, and New York Times columnist Paul Krugman, warned that we are “about to enter, or may have already entered, an era of corrupt governance unprecedented in U.S. history.”

We're about to enter, or may already have entered, an era of corrupt governance unprecedented in U.S. history. What does it mean? 1/
— Paul Krugman (@paulkrugman) November 21, 2016

Further tweets elaborated on the nature of the threat posed by a Trump administration that we face as a nation:
ace as a nation:

Important to realize that the money stolen by the first family is a minor issue; $10 billion, say, skimmed off the top is rounding error 2/
— Paul Krugman (@paulkrugman) November 21, 2016

What matters much more is the distortion of policy in directions that can be monetized. Gratuitous private investors in infrastructure 3/
— Paul Krugman (@paulkrugman) November 21, 2016

is just the start. Expect to see lots of privatization and a general shift from transparent to murky so that favors can be traded 4/
— Paul Krugman (@paulkrugman) November 21, 2016

And think about the pro-tyrant bias of foreign policy. Democratic regimes — say, in Europe — are by their own rules unable to offer 5/
— Paul Krugman (@paulkrugman) November 21, 2016

de facto personal bribes to the U.S. president. Putin's Russia or, for that matter, Xi's China, will be fine with sending huge business 6/
— Paul Krugman (@paulkrugman) November 21, 2016

to the profiteer-in-chief. And that will cause a tilt of U.S. policy toward authoritarian regimes. Stay alert 7/
— Paul Krugman (@paulkrugman) November 21, 2016

As Krugman warned Sunday,

It was obvious that Trump would exploit office for personal gain to an unprecedented degree. He has already started https://t.co/OT7SkX63f9

— Paul Krugman (@paulkrugman) November 20, 2016

https://twitter.com/paulkrugman

“It was obvious that Trump would exploit office for personal gain to an unprecedented degree. He has already started.”

The president-elect’s administration is filling with lobbyists, and his infrastructure rhetoric is just a huge tax break for corporations and, Krugman has suggested, a “privatization bid.”

The mainstream media is again cooperating with Trump, largely ignoring his Trump U. settlement, [ http://mediamatters.org/blog/2016/11/21/sunday-shows-gloss-over-ignore-trump-u-settlement/214577 ] let alone drawing any reasonable conclusions from it. Media Matters’ Eric Boehlert, on the other hand, noted that,

“[It] turns out crooked Trump Foundation is EXACTLY what DC press fantasized that Clinton Foundation was. press reax to $25M settlement? meh.”

Two things are already clear: the evidence is mounting steadily that Trump never meant to make America great but to fill his own pockets, and that the mainstream media, complicit in his election, now intends to normalize (and profit by) the new low in the swamp Trump once promised to drain but is now rapidly filling instead.

http://www.politicususa.com/2016/11/21/paul-krugman-warns-unprecedented-trump-corruption.html