Trump Plans To Balance His Budget By Selling Public Assets


Donald Trump’s recently-unveiled 2018 federal budget is a big, bold conservative dream:  Billions more for defense and security, much less for social welfare programs, and containing plans to attack the national debt. But with the GOP looking to cut taxes, especially on the wealthy, how can Trump keep his planned $4.1 trillion in federal expenditures? The answer is to engage in “asset recycling” by selling off public infrastructure and use the proceeds to build new infrastructure.

Specifically, Trump wants to spend some $200 billion to incentivize state and local governments to privatize public assets over the next decade.

The focus on privatizing public goods mirrors the president’s support for school voucher programs, which would lead to a greater role for private schools at the expense of traditional public schools. Popular among political conservatives, the goal of privatization hinges on a belief that the private sector is inherently more competent and competitive than the public sector.  Republicans often view the civilian part of government as complacent and inefficient, while Democrats typically view privatization as risky profiteering that will inevitably hurt workers and the environment.

But, given America’s aging infrastructure, Trump’s unorthodox plan for generating infrastructure funding may have bipartisan support. Even liberals will find it hard to resist the money that will come rolling in as public assets sell to the highest bidder: Corporate money will create many new infrastructure jobs and help incumbents get re-elected. It may be pork-barrel spending, but few members of either party are willing to put principles ahead of votes.

However, both the White House and Congress should make sure to write the privatization policies carefully before things are implemented. A major risk of privatizing important infrastructure is that the government remains on the hook to maintain it if anything goes wrong.  If the corporate owners fall down on the job, the government is obligated to step in. The principle is the same as the controversial bailouts that were used during the Great Recession of 2008-10: To protect jobs and production, the government subsidizes failing producers.

Around The Web