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CFR Attack on Trump’s ‘Infrastructure’: Mr. Mallaby Plays the Fool

Feb. 19, 2017 (EIRNS)—The New York Council on Foreign Relations (CFR), in the Sunday Washington Post, joins the drive to stop President Trump’s "infrastructure investments." The City of London/Wall Street establishment clearly thinks they can wipe out President Trump’s $1 trillion infrastructure idea as quickly and thoroughly as they stamped out Bill Clinton’s $110 billion infrastructure bank idea in 1993. (Clinton abandoned it within months under an all-points media, think-tank and Congressional barrage. The nation’s productivity has continued to pay the price since.)

Sebastian Mallaby—who is a British-trained economist, Alan Greenspan’s biographer, and the Paul Volcker Senior Fellow at the CFR—followed up Greenspan’s Feb. 17 interview attacking Trump’s (or anybody else’s) plans for infrastructure investment in the U.S. economy. Mallaby’s Post op-ed, titled, "The Economy Is Already Pretty Great," is laughably false but quite centered on Greenspan’s and London and Wall Street’s target.

Mr. Mallaby tells us that the "Obama expansion could soon become the third-longest of the post-war era." How very extraordinary. And, that "Wage growth has picked up to around 3.5% per year." This statement is also extraordinary—extraordinarily false, as current data on 2016 from the Bureau of Labor Statistics make clear (see separate report). Moreover, "Household income grew rapidly in 2015." In fact, that was the only year of Obama’s eight in which real household income grew at all, and median real weekly income is still somewhat below the 2007 level.

But then comes the real point: "In some past recoveries growth ... exceeded the sustainable rate." Obama’s crawling "recovery," then, is quite enough. "The main cloud on the horizon is that ... infrastructure spending could drive growth above its sustainable rate." Chair Janet Yellen’s Federal Reserve is also on this line, and Mallaby threatens the Fed "would put on the brakes" with high interest rates if under Trump, infrastructure investments led to "overheating."

And don’t worry about the lack of any productivity growth for a decade, Mallaby adds: "Official measures of productivity exclude the value to consumers of cool new stuff" like Internet search, auto navigation. Productivity growth is completely unpredictable anyway, he says, defying decades of economic research. So the CRF’s conclusion: Let’s have no "railing at the poor performance of the economy, and using that ... to justify rash populist measures" like investment in new infrastructure.

Meanwhile, infrastructure draft legislation may be coming from the White House. Senate GOP leader Mitch McConnell said at his Feb. 17 press conference that he

"expects to receive some kind of recommendation on an infrastructure bill shortly, a subject that we frequently handle on a bipartisan basis."

McConnell’s wife is the Transportation Secretary Elaine Chow.