Donald Trump is suddenly all-in with his plan on investing in infrastructure -- his plan, however, like so many others of his policies, is economic lunacy. It's completely circular in that he would literally cut spending on infrastructure as part of his plan to borrow for spending on infrastructure.
In other words, a Ponzi scheme, and a $550 billion dollar one at that.
The enormous borrowings by the federal government for infrastructure which Trump is proposing would, when combined with his proposed massive tax cuts mostly for the wealthy and his other plans, crush our economy, not advance it.
America's infrastructure spending deficit is undeniably enormous -- on the order of $3.3 trillion over the next decade -- of which roughly $1.5 trillion of needed projects are clearly beyond the capabilities of our states and municipalities.
But in the sharpest possible contrast to Mr. Trump, Secretary Clinton's very precise policy proposal would achieve both the capacity and the capability needed to fully finance this shortfall. Specifically, she believes that a new very large-scale "National Infrastructure Bank" needs to be established by Congress. It would be a wholly-owned government corporation with non-partisan directors appointed by the president and confirmed by the senate, and its project investment decisions would be made in a transparent, nonpartisan manner.
Compared to any funding alternative and especially compared to Trump's idea, this Infrastructure Bank offers several unmatched advantages. It would largely remove politics from the funding process; by involving large state and municipal pension plans and sovereign wealth funds as the major contributors to its capitalization, it would minimize the federal government's contribution; and by having the lowest possible overall cost of capital, it would impose the least financial burden on the eventual users and beneficiaries of the new infrastructure.
As its foundation capitalization the new Infrastructure Bank would be authorized by Congress to, mostly, guarantee a portion of the Bank's loans to infrastructure projects, as well as to make some direct loans. These federal appropriations, on the order of $150 to $200 billion in the aggregate, would notably be made only over time as the Bank ramps up.
In order to fully fund the aggregate target amount of infrastructure projects, the balance of the Bank's capital structure -- on the order of 90 percent of the total -- would come from loans to the Bank by the nation's large state and municipal pension plans and various sovereign funds, induced to do so and enhanced by the shared first-dollar federal guarantees.
It is these funds' relatively low rate of return expectations on their fixed income portfolios which match up best with the Bank's desire to achieve the lowest possible cost of capital.
Congress would of course 'score' the cost of any actual guarantee payments or loans made from the federal portion of the Bank's capitalization, as well as the few million dollars needed to fund the day-to-day operations of the Bank. But while the few if any direct loans would score as federal outlays when disbursed, the much larger guarantees portion of the Bank's federal appropriations would likely be scored at a much smaller amount than its face amount given the very low financial risks of the projects and thus the unlikelihood of the guarantees ever being called on -- and, again, even then this scoring would occur only as the Bank ramps up and grows its portfolio.
It's way past time to embrace the generational opportunity to move our national assets into the future. Infrastructure development is no longer "public works" even though that concept is embedded in our thinking -- instead, in first earning and then securing the futures of our children and our grandchildren, these projects are "strategic" in every sense.
Secretary Clinton understands both the infrastructure investment challenge and the enormous opportunity -- Mr. Trump pretty clearly never intended to advance a realistic policy on infrastructure, which is actually his most fatal economic flaw yet.
Leo Hindery, Jr. is Co-chair of the Task Force on Jobs Creation, founder of Jobs First 2012, and a member of the Council on Foreign Relations. He is the former CEO of AT&T Broadband and its predecessors, Tele-Communications, Inc. (TCI) and Liberty Media.