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

"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.



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.