Trump's Infrastructure Scam

The last time we looked at Ted Lieu's infrastructure legislation there were 33 co-sponsors. That was back at the end of May when he introduced it-- HCR 63-- "Supporting efforts to enact a bold jobs and infrastructure package that benefits all Americans, not just billionaires." Now there are 85 co-sponsors-- including, not just the progressives who backed Lieu's plan originally, but even some of the most reactionary Democrats in Congress. The last 3 to sign on as co-sponsors (last week) were 3 of Congress' worst Democrats, Wall Street-owned New Dems Wasserman Schultz, Adam Schiff and Josh Gottheimer. Ryan and McCarthy decided to bury the legislation in Bill Schuster's Transportation and Infrastructure Committee and Schuster gave it to Louisiana nincompoop, Garret Graves-- anyone ever even hear of that imbecile?-- who chairs the Subcommittee on Water Resources and Environment. Schuster and Graves decided to allow no debate, no hearings, no nothing. It's how they kill good legislation that would benefit their own constituents and the whole country.

Ironically, Lieu's bill-- the 21st Century New Deal For Jobs-- is just the kind of legislation that Trump should embrace and present to the American people as his own. Lieu: "America’s infrastructure is desperately in need of repair. This year, the American Society of Civil Engineers estimated $4.6 trillion in infrastructure needs, of which more than $2 trillion did not have estimated funding. The American people deserve to have a serious conversation about how to address these needs. To fund infrastructure projects, President Trump's relatively small and incoherent plan would use irresponsible tax gimmicks that benefit Wall Street at the expense of taxpayers. My colleagues and I know that Americans cannot afford to settle for this scam. Instead, we have introduced the 21st Century New Deal for Jobs to ensure that Congress boldly addresses our infrastructure needs and supports a plan that creates millions of jobs without sacrificing protections for workers and the environment."

Randy Bryce, the Wisconsin iron worker running an eye-popping campaign for the House seat occupied by the increasingly unpopular Paul Ryan, told me that he'd sign on as a co-sponsor to Lieu's bill as soon as he's elected to Congress. "America's infrastructure made America great. It turned us into a superpower. Not only does the entirety of commerce depend upon a solid infrastructure, but, I can talk firsthand about how many hours of work I have done on it which provided a means to keep a roof over my head and food on the table. Currently our infrastructure is in a shambles. We can't afford one more bridge to collapse due to neglect. Workers need good paying family supporting jobs. What better way to put us back to work than by rebuilding America? It's time to reinvest in America. Further neglect is not an option."

And Bryce is far from the only congressional candidate clamoring to co-sponsor Lieu's legislation. David Gill is running for the downstate Illinois seat occupied by GOP do-nothing backbencher Rod Davis "Yes," he told us, "I would be an enthusiastic co-sponsor of Ted Lieu's progressive infrastructure plan! This is exactly the type of legislation we need today here in America-- it provides good jobs for people AND modernizes our infrastructure, all in one fell swoop. I see this as another plank in a platform designed to bring FDR's Second Bill of Rights to fruition at last, along with single-payer health care and free tuition at public universities. Out on the campaign trail, I see and hear tremendous anger and resentment at our current state of political affairs, and I have no doubt that the backlash is coming next November, and that we truly can achieve the vision laid out by FDR so many decades ago."

Similarly, the Blue America-backed candidate in Houston (TX-07), Dr. Jason Westin, who may be best-known for his work in healthcare-related issues, is another candidate running on a platform that includes Lieu's infrastructure bill. "Rebuilding our infrastructure is a key issue in Houston. In 2012, career politician John Culberson over-ruled the voters and Houston Metro's plan to expand mass transit. I'm a fierce advocate of investment in infrastructure to create millions of good jobs, to modernize our transportation networks, reinvest in schools to ensure our children have opportunities to succeed, and to ensure high speed internet access so all can benefit from our increasingly connected society. These long overdue improvements will make our communities better places to live in the 21st century."

Blue America's newest endorsed candidate, Jared Golden (ME-02) told us that he'll sign on as a co-sponsor to Ted's bill when he gets to Washington. He told us that "Poliquin claims his top priority is bringing jobs back to Maine's 2nd CD, but no significant legislation has been passed that would do that. Instead, he's been busy putting jobs at rural Maine hospitals at risk with his health care repeal vote. One way Poliquin and his boss, Speaker Paul Ryan, could bring jobs back to Maine would be to work with the President on his promise to invest in our infrastructure. Maine's economy is recovering from the recession at a pace that is slower than the rest of New England. Government investment in infrastructure projects would be a welcome shot in the arm for a lagging economy. It would create construction jobs and support business growth that would lead to more job growth for years to come. Unfortunately, Poliquin is likely to support the President's plan to pay to fix our roads and bridges with tax breaks that will benefit Wall Street. Having previously worked for the big banks, that kind of scheme is right up his alley."

This week Lydia O'Neal, writing for the International Business Times, reported that Trump doesn't seem capable of learning from local governments about how catastrophic it is to outsource infrastructure planning to for-profit corporations. "Public-private partnerships," she wrote, "are frequently portrayed, especially by President Donald Trump, as an easy infrastructure fix for cities and states with tight budgets. But horror stories of so-called 'P3s' gone wrong have been making headlines for the past decade, often as a result of contractual clauses that prove costly for governments or keep information from the public eye. They don’t have to be that way." She gives 5 examples-- in Virginia, Texas, Indiana, Illinois and Pennsylvania-- of how this approach should serve as a warning to the Trump Regime-- but isn't. The state of Pennsylvania, for example, leased its bridges, but still wound up paying for them.

In 2015, a consortium led by the Melbourne-based Plenary Group and three subsidiaries of the Chicago construction conglomerate Walsh Group launched a 28-year project to reconstruct and maintain 558 of Pennsylvania’s 4,350-plus ailing bridges, many of them rural. Instead of requiring drivers to pay tolls to cross them, the agreement required the Pennsylvania Department of Transportation to provide the consortium, Plenary Walsh Keystone Partners, with $35.8 million in regular “availability payments” and $224.7 million in periodic milestone payments and contributions to the consortium’s Mobilization Fund. The remaining financing stemmed from $721.5 million in private activity bonds issued by the U.S. Department of Transportation and $59.4 million in equity from the consortium.

Although the deal cost taxpayers 30 percent less than the renovations would had the state reconstructed the bridges itself, the cost to PennDOT drew criticism for potentially giving Plenary Walsh an incentive to spend only enough money on construction of bridges for them to function optimally within the consortium’s 25-year maintenance period, according to a report on the project from the Bipartisan Policy Center. (Other estimates peg the discount at 20 percent.)

As Shahrzad Habibi, research and policy director at the contracting think tank In the Public Interest, told IBT, availability payments are just one funding mechanism that debunks the myth of a corporation swooping in to cover infrastructure expenses at no cost to taxpayers.

“You and I are the ways these things get paid back. It doesn’t matter whether it’s a P3 or public funding,” Habibi said, adding that governments may be attracted to P3s with availability payments because the financing method appears less costly than it actually is. “If you’re a city and you issue a bond, that debt shows up on your balance sheet. But if you’re paying an availability payment, that doesn’t show up on your balance sheet, but you’re still obligated to pay that availability fee.”

...“Sometimes political leaders fall into a trap where they don’t have enough money, and they look at these firms and say, ‘They have the money.’ But the firms are looking at the rate of return, because they want to make money as well,” he said. “Now they understand that it’s alternative financing, but it’s still financing… The government’s transferring risk that it otherwise might have.”

P3 projects using availability payment models made up 29 percent of closed deals between 2008 and 2013, but 61 percent of projects at the pre-launch stage in the latter year relied on availability payments for financing and as a way to “reduce exposure to revenue volatility,” according to a 2015 Treasury Department report on the market for P3 deals in infrastructure. As alternatives, the Treasury suggested several other financing mechanisms that allow governments and private companies to shoulder the costs more equally, such as price caps, limits on the return on investment and sharing of profits.

Pence should be warning Trump about what went wrong in Indiana, but he won't-- since he was an integral part of what went wrong. O'Neal wrote that "The Indiana Toll Road project suffered multiple problems: sharp declines in bridge quality, quickly rising tolls, the concessionaire’s bankruptcy and a subsequent refusal by then-Governor Mike Pence to take the road back, among others. Throughout those debacles, the Indiana Toll Road Concessionaire Company, headed by Macquarie and Spanish infrastructure company Cintra S.A., and the Indiana Finance Authority-- like entities in many other P3 deals-- had broad contractual authority to shield aspects of the deal from public records requests."

A provision on information disclosures in the Indiana Toll Road’s contract begins with a note of transparency, requiring compliance with the state’s open records laws, but that transparency is followed by a litany of caveats that effectively let the ITRCC decide what ought to be public-- and allowed the IFA to protect those decisions.

When IBT sought, through a Freedom of Information Act request, access to a report conducted by the auditor KPMG that assisted the IFA in deciding on a lessee to replace the bankrupt toll road operator between late 2014 and early 2015, the IFA rejected the request on the grounds that the information was proprietary. It did the same when a group of northern Indiana counties bidding for a takeover of the road sought the same report a year and a half earlier. In May of 2015, the IFA approved the sale of the ITRCC to the Australian firm IFM investors for $5.725 billion.

Mark Pocan (D-WI) summed this up by cutting right to the heart of the problem-- the GOP approach itself: "Democrats are leading the way for millions of jobs. Donald Trump wants to sell off our roads to foreign governments and give taxpayer dollars to Wall Street billionaires, and he calls that job creation? Maybe that will create jobs in countries like Russia, but not for hard-working Americans. Democrats are determined to take this fight to the people. Our country is in dire need of a bold vision to repair our crumbling roads and bridges, clean our air and water, restore our children's unsafe school buildings, and connect our communities to each other with high-speed rail and internet. While President Trump and the Republicans are busy concocting a trillion-dollar Wall Street giveaway under the guise of infrastructure, Democrats believe big corporations should pay their fair share to support dignified employment and build a more sustainable and vibrant economy for everyone."

Last night we spoke with Adam Green, co-founder of the Progressive Change Campaign Committee, which is a leader in the Millions Of Jobs Coalition and which worked closely with Lieu to write the resolution. Others in the coalition include unions, racial justice, and environmental groups. He talked with us about the very clear contrast between how Democrats see progress on infrastructure and what Trump is up to. "Trump seeks to sell off our public roads and bridges to Wall Street investors and foreign corporations who will put up tolls and transfer money from our communities into their pockets. Congressman Lieu and congressional Democrats want to create millions of jobs by rebuilding our roads, bridges, and schools-- and create 21st Century jobs in areas like clean energy. This bold economic populist message is something Democrats should carry proudly in the 2018 election, and its great that candidates like Randy Bryce and others are amplifying this message on the campaign trail."