The State of Disunion Speech (Jan. 30)

Update 246:  The State of Disunion Speech

Make a Mint on our SOTU Sweepstakes

Some predictions for tonight:
•  This Update will be almost as long as tonight’s SOTU speech. Sad.

•  It will have exactly proportional coverage of domestic economic policy issues as Trump’s speech. Or the other way around.

•  Super Bowl halftime will look like Reality TV by comparison.

•  The ratings will set an all-time record. The P/patriots will win.  Unsure about beating the spread.





Infrastructure:  Long Overdue, Short on Funds

Last Thursday, leaders of cities from Los Angeles to New York met with the President’s infrastructure advisor, DJ Gribbin, to discuss the administration’s infrastructure plan. The city leaders are upset with a six-page memo leaked last week, which provides a rough outline of the administration’s plans.

The White House is hoping that $200 billion in federal funds allocated through new expenditures will stimulate a projected $1 trillion in investment from cities, states, and private sources.  Since the 1980s, state and local infrastructure expenditures have increased by over 100 percent, while federal investment in infrastructure has remained static.


Democrats fear that this will create a zero-sum game, contributing a greater amount for a relatively meager amount of federal dollars while forcing cities to scrounge up funds that might otherwise go towards other badly-needed social expenditure. The American Society of Civil Engineers says that investment of $2 trillion is necessary by 2025 to upgrade everything from roads to bridges and drinking water.

Trump has been trying to obtain bipartisan approval for this plan, but such support is unlikely. The proposal would provide a relatively small federal funds match for infrastructure projects while increasing project costs due to union labor, Buy American, and additional administrative requirements that are attached to the use of federal funds. Democrats will not likely supports this burden onto the states and localities, and would instead prefer to use more federal funding.

The plan will likely run into fiscal challenges. Gribbin has already stated that the plan does not provide any new revenue. So no go on the Hill, right?  House Transportation and Infrastructure Committee Chair Shuster insists that any bill must be bipartisan and fiscally responsible.  New expenditures that are unaccompanied by pay-fors will make moving Trump’s infrastructure plans all the more difficult in Congress.

If this bill is anything like the leaks that have surfaced, Trump’s’ infrastructure plan will amount to a small investment from the federal government with an even smaller utility gained.  The President will surely use the State of the Union to highlight infrastructure as a legislative priority, and to appeal to moderate Democrats in the Senate. Don’t expect the Democrats to take the bait.


Tax: Trump to Tout GOP Trophy

Recent economic reports show that the American economy is slowly starting to pick up steam, and the President will surely want to take credit for the phenomenon. Trump was well received while trumpeting tax reform’s effect on the American economy during his speech at Davos. He will likely attempt the same trick during the State of the Union. Expect the President to take a characteristically braggadocious tone about the only legislative achievement he can claim from his first year in office.

Substantively, the most notable aspects of Trump’s State of the Union tax statement will likely be what isn’t said. The growth figures he will surely take credit for are part of global pattern of economic expansion and have relatively little to do with any recently enacted policy changes.  Trump will also likely alise the fact that the tax act is riddled with mistakes and might require a corrections bill sometime in the next couple of months. Should a corrections bill be forthcoming, expect another round of furious lobbying activity as K Street attempts to get another bite of the tax apple.


Budget:  Shutdown Blame Or Kumbaya?

The President will enjoy 45 minutes of uninterrupted nationally televised speaking time. Can Trump pass on a golden opportunity to deride the “Schumer Shutdown”?  Or will Trump call on Democrats to fund the government without DREAMer protections and ignore the promise to take up comprehensive immigration reform.

With another spending deadline looming, he may also be preparing threats to discourage Senator Schumer from shutting the government down again — or else.

In a few weeks, the President is to submit his FY19 budget, which will invariably call for a staggering $1 trillion deficit, the nation’s first.

Last year, the President’s budget called for severe cuts, particularly with respect to infrastructure. That budget called for cuts to the Highway Trust Fund rising to $20 billion at the end of ten years.

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