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It’s ‘Public Funding,’ but GOP Tax Folly Won’t Build Infrastructure

Oct. 30, 2017 (EIRNS)—Showing that Wall Street thinking still rules in the Republican Party and in President Trump’s Cabinet—if not in the Oval Office—Transportation Secretary Elaine Chao told the American Trucking Association on Oct. 27, "Infrastructure legislation will have to wait until tax reform has been completed."

"Tax reform by Thanksgiving" has now become the obsession of the Republican Party leadership, which is berating its caucus that Republicans will lose both Houses of Congress in 2018 without it. Moreover, major tax reform must be passed in the half dozen or so legislative days available between now and Thanksgiving. A legislative outline is still two days away!

This feverish drive pushed by Wall Street and its Administration representatives, above all, is to lower the corporate tax rate from 35% (most larger corporations actually pay an average of 25% or so) to 20%. This will raise their profitability. Unsaid in public, is that the U.S. corporate sector is crushed by a $14 trillion unpayable debt bubble soon to implode, and higher profitability could delay this.

A knowledgeable Congressional source explained that with a budget resolution now passed which called for the loss of $1.5 trillion in Federal tax revenue over 10 years, Ways and Means Chair Kevin Brady (R-TX) will introduce his tax legislation on Wednesday, Nov. 1. It will incorporate projections of tax cuts of $5.5 trillion, and tax increases of $4 trillion over ten years, making a projected net loss of $1.5 trillion in revenue. In case of defeat for this "tax reform"—certainly likely—the fallback will be a "tax cut" of just $1.5 trillion over 10 years, and no offsetting increases.

The rumored big increase in tax funds into the Highway Trust Fund for transportation infrastructure funding, will be very difficult to incorporate in this process. Presidential Economic Advisor Gary Cohn discussed such a big Highway Trust Fund boost, including an increase in the Federal gasoline tax from 18.7 to 26 cents/gallon, with the Problem Solvers Caucus on Oct. 25.

The only significant indication from Cohn’s reported discussion, is that it shows that the Trump Administration is now pursuing public funding for infrastructure building, rather than public-private partnerships (PPPs).

But this remains subjugated to Wall Street’s demand for tax reform to hold up the unpayable debt bubble a while longer.