OMB Director Mulvaney Budgets "Leveraged" $200 Billion For Trump Infrastructure Plan

Tyler Durden's picture

"The president wants a trillion dollars worth of work on the ground and we're going to give it to him," explained Office of Management and Budget Director Mick Mulvaney this afternoon. By the magic of leveraged private investment (that is not buying back its own stock or stashing cash overseas), the Trump administration will transform a $200 billion line item into a trillion-dollar stimulus plan (but it won't be ready until the fall).

Trump ran for president in part on a promise to pour money into U.S. roads, airports and other public works, but he has so far disclosed few details about how he’d pay for the improvements, and how much of the money would come from public versus private sources.

Infrastructure

 

As a reminder, this was Trump's full infrastructure proposal from Nov 2016:

And now, as Bloomberg reports, we have some further details on how the Trump administration will fund it...

President Donald Trump plans to propose spending about $200 billion in taxpayer dollars on an infrastructure development plan that would leverage private financing, his budget director said -- adding that the plan won’t be ready until this fall.

 

“We’re certainly going to spend some money,” Office of Management and Budget Director Mick Mulvaney said Thursday at an event sponsored by the Institute of International Finance. “The president wants a trillion dollars worth of work on the ground and we’re going to give it to him.”

 

Mulvaney said there might a “5-to-1 sort of leverage ratio on that.” His remarks suggested that the total spending would $1 trillion.

 

The plan is “in its early discussions” and won’t be ready until the fall, he said. Trump had suggested last week in an interview on Fox Business News that he might link the infrastructure plan to health-care legislation that Congress is considering now or to another measure.

Of course, the big question is whether Trump's plan can truly be funded without public dollars.

Trump's economics team argues that the proposed tax credits would be offset by income taxes paid by workers employed by new projects and corporate taxes paid by contractors.  That said, the assumption implies that those workers wouldn't otherwise already be working.   Moreover, while certain types of infrastructure projects lend themselves to private financing, projects like toll roads, airports or water systems where funds can be segregated and investors can be paid a return on invested capital, other projects like pure maintenance work are more difficult to fund privately.

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nachochan's picture

Just raid the pension funds is what this sounds like to me.  

Creepy_Azz_Crackaah's picture

Infrastructure is fine. This is more Big Government crap. 

Let the local governments with their unpayable pensions finally be responsible for their shit, fixing it when needed, eliminating the bloated gubmint pay and pensions to pay for it.

All of the shitty raods and bridges in my area are state and local, not federal.

knukles's picture

Also (dat bein' da troof) what does the dude mean when he says 'leveraged"?
It's all already gonna be financed with debt, so, I'm a gonna borrow against my borrowings, eh?
Might need The City for that one!

BullyBearish's picture

double damn guaranteed to be a synthetic, squared, collateralized, bespoken, tranched "investment" instrument available for your government-mandated 401k...

Stuck on Zero's picture

The Chinese government spends 20 times as much on infrastructure as the US. Where has it gotten them? The most powerful, fastest growing economy in the world. We spent that much on welfare, bureaucrats, F35s, and Navy ships that don't go.

AGuy's picture

"The Chinese government spends 20 times as much on infrastructure as the US. "

LOL! You mean like those empty cities that no one lives in, or the huge empty shopping malls. Growth by building the worlds largest potamkin cities in the World!

China is cooked, and been cooking the books for nearly 2 decades.

fbazzrea's picture

we're borrowing the 20% from the Fed

and paying the 80% out on terms to its member banks via fees, tolls, fuel taxes, etc.

Urban Redneck's picture

Here's an idea that will send you straight to the bottle, and demonstrates what an intellectual and financial lightweight Mulvaney is...

5x leverage is for Etrade babies, real big swinging dicks on the other hand...

So let's step it to to ludicrous speed, effectively turn Treasury & the tax code into a public bank to manipulate the private FED member banks,

at 1000x times leverage, 

and a NEGATIVE cost to the tax payers,

the Faustian aspect of the bargain, is that some politicians are going to make some banksters even richer...

As if that wouldn't happen anyway.

Those trillions in excess reserves are sitting at the FED - the only location in the financial universe where they are not excessively and endlessly rehypothecated.  So that is literally trillions on the side lines, and the FED is PAYING the banks a tiny interest payments to idle all that money they created...

So give the banks PREFERENTIAL TAX TREATMENT on issuing qualifying loans (but less than they normally would on losses, and specifically loss sharing with the taxpayers, so they actually have to do some due diligence)

There's your trillion dollars in infrastructure spending, at no cost (ex inflation) to the public, and a red pill that self centered moonbats in their parents basements would never have the balls to swallow.

Some days I really am tempted to go back to that life... then I remember how few high functioning psychopaths are capable of doing their thing out of selflessness, instead of self interest.

 

baghead's picture

they could tuck funding for the wall in the "infrastructure" bill.Nobody would read it.

gatorengineer's picture

Infrastructure is more than fine its absurd cronyism.  In Pennsy the state with the highest gas tax they are paving the same road every other year whether it needs it or not.

flaunt's picture

They can scrounge up trillions to disappear into the Middle East but holy effing shit if someone puts that kind of money into our own country right?  I mean how the fuck are we supposed to turn America into a 3rd world muslim-infested shithole if they have first-world infrastructure, RIGHT?!

asteroids's picture

Law of nature. There ain't no free lunch. That goes for 5:1 leveraged bullshit too.

hotrod's picture

Obama spent  10 trillion over 8 years,   what kind of impact does 1 trillion over 4 years have?

knukles's picture

If you're a contract winner, it's "A big fucking deal, Mr President"

The central planners's picture

Trump will have to spend 20 trillion to repay debt plus 1 trillion in this infrastructure venture and add another trillion to fund ISIS and moderate alqaeda.

SloMoe's picture

“5-to-1 sort of leverage ratio on that.”

Sounds juicy. Who's running the book? Goldman?

milking institute's picture

They'll fix all the roads and bridges,really,this time for sure! no really,i,m serious,this time is different! you'll see.... Hahahahahah

rickv404's picture

"Of course, the big question is whether Trump's plan can truly be funded without public dollars."

Nope. Get ready for a practical doubling of oil and gas prices, once again. 

Kefeer's picture

Once a toll road; always a toll road.  Total "bull".

One of We's picture

Just name it the "Affordable Infrastructure Improvement Act," say its for the children, the poor, and the lgbhivtv and print some fucking loot.  Another option would be to use tomahawks to demo the old bridges and roads and give KBR the contract to rebuild.  Congressscum on both sides of the party would be lining up at their doctors for treatment of longterm boners at that one.... 

Satan's picture

Value Added Tax. On everything.

 

Its coming.

wisehiney's picture

It's on you, Mulvaney.

wisehiney's picture

$800,000 per job.

Past eight years.

So what?

An insane joke. 

Love you friend, who ALWAYS understood that it is hilarious.

Even if you fucked up fool, and did not play the game.

 

gatorengineer's picture

An economy at ""Full"" underemployment, and we have to do the old infrastructure thing to create jobs?  Whose lying it isnt that great, or we are just lining our pockets...

pebblewriter's picture

This is the same OMB director who said Trump's promise to eliminate the national debt was hyperbole.  http://thehill.com/homenews/administration/328424-budget-director-trumps...

But, he's sure Trump can scrape together a trillion for infrastructure!?  Is that before or after the tax cuts we've been promised?

My teenage daughter did the math last year for an essay in her econ class.  If we eliminated the debt and, therefore, the $223 billion (and rising) in interest payments every year, we''d have enough money to build 1,000 community hospitals, 10,000 day cares, double the budget for NIH and quadruple the budget for alternative energy research, repave all 48,000 miles of interstate highway, and rebuild every one of those crumbling bridges.

This guy wants to somehow leverage the spending?  More debt is not the answer.

 

bluskyes's picture

Steal the pensions. Convert into national infrastructure bonds. Pay coupons using tolls and fees.

scoutshonor's picture

Perhaps the plan is to work in just the inverse of how usual government contracts work.  When it comes time for the "cost overages" instead of the taxpayers coughing up the extra loot--the contractors will pitch in the cost over-run.

Maybe we can do that with the high speed rail boondoggle out here in Cali;-)

whatisthat's picture

I would observe the stated financials listed within the "the plan" documented in this post, may remind some of us of more incredible rates-of-return from ponzi schemes of the historial past.