(Bloomberg) -- An influential conservative group backed by billionaire brothers Charles and David Koch is questioning a plan to spend $1 trillion on the nation's infrastructure and warning that one of President Donald Trump's signature policy initiatives could become a “spending boondoggle.”
In a memo released Friday, Freedom Partners cautions Trump and the Republican-controlled Congress against making the same mistakes that the group says were in the $787 billion federal stimulus bill in 2009. That legislation, passed at former President Barack Obama's urging, included tax cuts, benefits payments and other spending in addition to infrastructure. It was aimed at boosting the U.S. economy amid the worst recession since the Great Depression.
The stimulus “added nearly a trillion dollars to the national debt and failed to create the so called ‘shovel ready' infrastructure jobs that were promised,” Nathan Nascimento, the group's vice president of policy, said in a statement.
“There is a right way and a wrong way to repair and modernize our infrastructure, and it's time Washington learned from its mistakes,” Nascimento said. “We shouldn't be asking taxpayers for hundreds of billions of dollars to fund ‘stimulus 2.0' when there are common sense steps we can take right now to address our infrastructure without spending another dime.”
The White House declined to comment. In his speech Tuesday to a joint session of Congress, Trump said he wants legislation to support $1 trillion worth of investments in rebuilding roads, bridges, tunnels, airports, and other crumbling infrastructure. He's argued the projects would put millions of Americans to work and boost the economy.
Public-Private Partnerships
Trump hasn't detailed how his infrastructure plan would be funded or what types of projects it would include, but he has said he wants to tap private capital and public-private partnerships. Congressional leaders from both parties disagree about how much new federal money should be included, although Senate Majority Leader Mitch McConnell has said he wants to avoid “a trillion-dollar stimulus.”
A 2011 Government Accountability Office report found that while the money for transportation work in the 2009 recovery act helped fund tens of thousands of jobs, its “long-term benefits are unclear.”
Freedom Partners stopped short of directly opposing Trump's still-unformed plan. A spokesman, Bill Riggs, said the group was highlighting a “more responsible, effective and accountable way to improve infrastructure.” He declined to share any plans the group might have that go beyond the statement and “educating lawmakers.”
Prevailing Wage
In its memo, Freedom Partners says additional ways to reduce the cost of infrastructure include the repeal of the Davis-Bacon Act, which requires federal contractors to pay workers a prevailing wage set by the Labor Department. The group also calls for giving state and local governments more control over public-works spending and simplifying environmental rules.
Congressional Democrats and even some Republicans have argued that relying on the private sector alone won't generate $1 trillion of investment or allow projects in all parts of the U.S. Deals involving private investment require a revenue stream such as tolls, which aren't popular or even practical in sparsely populated areas.
A senior White House official, speaking this week on condition of anonymity, said it's premature to speculate on what the mix of private and public funding and financing might be.
The Trump administration convened a government-wide meeting Thursday with 15 cabinet members and agency leaders to solicit feedback on what new and existing projects should be considered, how policies, regulations and statutes can be changed to speed up projects, and what funding and financing mechanisms to use.
All options, including an infrastructure bank, are on the table, and no decisions have been made, the White House official said. The administration plans to use the feedback from the agencies to develop a proposal and the timing is uncertain, the official said.
To contact the reporters on this story: John McCormick in Chicago at jmccormick16@bloomberg.net, Mark Niquette in Columbus at mniquette@bloomberg.net.
To contact the editors responsible for this story: Joshua Gallu at jgallu@bloomberg.net, John Voskuhl, Jon Morgan
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