Trump’s $1 Trillion Promise vs. Congress

bn-ra009_rove12_im_20161130142608Donald Trump’s cabinet is off to an impressive start. Mr. Trump has picked accomplished leaders, including Sen. Jeff Sessions,Betsy DeVos and Wilbur Ross. Their competence, seriousness and reform-minded spirit reflect well on the president-elect.

Mr. Trump is now viewed favorably by the same share of Americans that he won at the ballot box. Forty-six percent see him positively, according to a survey released Nov. 21 by Politico/Morning Consult, and 46% see him negatively. That’s a big improvement from exit polls on Election Day, when voters rated Mr. Trump 38% positive and 60% negative.

There’s more work to be done: Mr. Trump approaches his Jan. 20 inauguration with the worst favorability numbers of any modern president. This matters because a well-liked president has more political capital. If Team Trump wants his ratings to keep rising, it should (a) focus on the important issues, (b) keep expectations in check and (c) understand the reality of the GOP’s congressional majorities.

Take the infrastructure chatter from Steve Bannon, Mr. Trump’s chief strategist, who wants to “rebuild everything,” including “shipyards, iron works,” with a $1 trillion program. “We’re just going to throw it up against the wall and see if it sticks,” he said.

Congressional Republicans will feel hinky about that trillion-dollar price tag, having spent years decrying the cost and feeble results of President Obama’s $830 billion stimulus. That’s especially true given the vote coming next March on raising the debt ceiling.

The GOP Congress might be averse to spending tax dollars to prop up private companies, having attacked Democrats over Solyndra’s bankruptcy. Republicans also might be suspicious of creating a new infrastructure bank, having assailed pay-to-play cronyism by Hillary and Bill Clinton and their foundation.

The Trump campaign promised that its infrastructure plan would be “deficit-neutral,” proposing tax credits to “attract new private infrastructure investments.” That’s all well and good: Encouraging private investment can free up money already in the budget.

But not all infrastructure can be provided by public-private partnerships. Should every road or bridge be subject to a toll? The new administration also needs to strengthen existing infrastructure programs like those of the Highway Trust Fund and Army Corps of Engineers.

Increased automobile fuel economy has meant that gas-tax receipts haven’t kept pace with the miles driven. The Highway Trust Fund stays solvent only through transfers from general revenue. But they have not kept pace with the need for more roads, repairs and maintenance.

The Army Corps of Engineers has a project backlog—ports, flood control, inland navigation—of nearly $60 billion, all with net economic benefits. Most require state, local or private matching funds, which in many cases are already pledged.

These construction projects could create jobs, but only if there is long-term funding. Contractors and suppliers won’t hire people or invest in facilities and equipment unless funding is locked in through multiyear appropriations.

Yet it will be difficult to find money to pay for Mr. Trump’s tax credits, to restore the Highway Trust Fund’s solvency, and to erase the Corps’ backlog. There’s some talk about using revenue from a temporary lower tax rate on repatriated foreign earnings. But leaders on the House Ways and Means Committee have indicated that they want any such windfall to go toward lowering corporate tax rates.

The good news for the Trump administration is that some infrastructure needs would be better met by spinning off a government function. Air-traffic control could be handled by a nonprofit funded by stakeholders. Dozens of countries have already made this switch. Their experience shows this would reduce the federal budget and spur modernization. Investment in utility infrastructure—pipelines, power lines and smart-grid technology—could be boosted by providing regulatory clarity and predictability.

Even then, most of the items on Mr. Trump’s economic priorities—infrastructure spending, tax reform, ObamaCare replacement—are likely to have a greater effect in the medium- and long-term than they will immediately.

What matters in the short run is public confidence. There isn’t time for sideshows. Americans don’t expect to see all Mr. Trump’s promises materialize overnight. But they do hope the new administration will persistently move its economic agenda forward. If the president-elect creates greater confidence, it will rouse the “animal spirits” that power the economy. The results—in jobs, paychecks and an improving national spirit—could be healthy and swift.

Mr. Rove helped organize the political-action committee American Crossroads and is the author of “The Triumph of William McKinley” (Simon & Schuster, 2015).

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