Trump's promise to rebuild America faces a dilemma. Infraconomics2 | Page 2

A poor infrastructure hampering economic
productivity and growth , mirror of America’s decline in
the global economy ?
◆ Memories of the good old days reminds us of
splendid bridges or towers such as the Golden Gate
considered as a symbol of American supremacy.
Trump’s claims about his great infrastructure plan to
rebuild America could face criticism from political
leaders telling us that this is a dream : unrealistic and
expensive in a period of slow growth for the U.S
economy.
The White House unveiled their $ 200 billion plan
dedicated to support investment and improve the
infrastructure.
Skeptical about its efficiency in the long term, we actually
believe that this program will put more pressure on states
and private investors. Indeed, the growing involvement
of the private sector is absolutely necessary to finance
America’s infrastructure without imposing a tax burden
on households. There’s a determination to fix the
During the campaign, Trump mentioned a $1 trillion infrastructure with federal funds that are supposed to
national plan to rebuild America’s infrastructure with foster investment and promote additional investment of
the creation of several jobs for the U.S population. $1.3 trillion in state and corporate investment.
This program aims to enhance competitiveness by
allocating more resources to infrastructure projects to In the present case, Trump’s commitment to accelerate
increase productivity : the U.S economy relies mainly infrastructure projects with regulations aiming to reduce
on low transportation costs which permits businesses delays to issue environmental and transportation permits.
to develop their activity and raise their profitability. could tackle the problem of infrastructure delivery.
Leading the way to PPP scheme recognized to be cost
Infrastructure as a key pillar for economic effective in certain situation, it’s a fair bet that the funding
development needs to be improved in order to system to repair the infrastructure will need structural
support growth and business productivity in the future. reforms in order to find any alternative source of funding.
The government witnesses that America’s infrastructure There’s a heating debate about the privatization of the
is literally falling apart with crumbling transportation infrastructure sector which tends to divide the country
systems or the deteriation of the international and and we urge political leaders to adopt PPP to mitigate risk
domestic market due to higher costs to distribute their in a critical sector for the national economy.
goods.
Up to 25% of public infrastructure funding comes from
According to the American society of Civil Engineers in federal government, there’s a major investment from states
a paper called ‘‘Failure to Act’’, the cost of deteriorating and local government in public infrastructure through a
infrastructure could substantially affect household income mechanism of taxation. Rising gas tax or imposing taxes
on the transportation sector will diminish economic
and a major loss of revenues for various sectors.
productivity in a larger scale. Giving prioirity to growth
will require support from states and local government
In 2025, a gap in the infrastructure
to maintain their activity in a global market considered
investment could have a substantial
agressive. Public infrastructure projects rhyme with costs
overruns and construction delays underlying a difficulty to
impact on jobs and national GDP. A
deliver infrastructure in time.
‘‘
major premise of this report is that
infrastructure will cost 2.546.000 jobs just
for 2025 and 5.809.000 jobs in 2040 due to
a crumbling infrastructure.
Another alarming fact is that the country
needs to fulfill a gap estimated at
$ 5.182 billions in order to improve their
infrastructure in the future, a serious
challenge for the U.S economy in terms of
investment.
Establishing a PPP can provide multiple benefits for local
government : the infrastructure generate more value with
various source of funding, the government can transfer
the maintenance and risk to the private sector to avoid
any additionnal costs, so there’s a full transfer of the
infrastructure to the private sector to protect taxpayers.
Introducing a share of risk will permit to reduce cost and
create a solid system to support vital infrastructure, in
fact some projects needs to find investment and avoid
a complete privatization of the sector mainly due to a
higher cost to finance PPP.
Trump’s administration needs to focus on the cost of
private capital and government’s cost of borrowing , it
might be interesting to provide a support to the private
sector in order to create employment. ◆
American Infrastructure : Trump’ s promise to rebuild America faces a dilemma with an unrealistic investment plan