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Rebuilding America
Trump’s Infrastructure Plan Opens Door to Foreigners

If President-elect Trump successfully pushes through even just a fraction of the $1 trillion plan he proposed, hundreds or even thousands of firms stand to benefit. Many of these companies will be American, and they will help President-elect Trump build a powerful political machine. But a recent promise by Qatar serves as a reminder that some of the interests looking to gain from Trump’s infrastructure investments will be foreign. Reuters reports:

Qatar plans to spend as much as $205 billion on infrastructure between 2013 and 2018, the acting head of project finance at the state’s largest lender said on Tuesday, as the country invests its vast hydrocarbon wealth in a development boom.

The Gulf Arab state is spending billions of dollars in areas such as transport, electricity and water generation and housing, in an effort to improve its economy and build towards its hosting of the 2022 soccer World Cup.

The government has been ramping up its own spending as part of this push. The budget for fiscal 2013/4 is up 17.9 percent to 210.6 billion riyals ($57.8 billion), thanks to wealth accrued as the world’s largest exporter of liquefied natural gas.

Much of the planned infrastructure spending will be financed by the government level. But significant funding still needs to come from both local and international lenders, said Yusuf Saeed, acting head of global structured finance at Qatar National Bank.

Trump has not commented on how and whether foreign interests might be involved in the infrastructure plans. But Qatar won’t be the only foreign interest knocking on the doors of Trump Tower/the White House, nor will overseas assistance come only in the form of capital investment offers. Much of the privatization expertise is in Europe, which has decades of experience with the kinds of private-public partnerships Trump will likely pursue. Companies like Spain’s Cintra already have deals to construct and operate highway projects with American state governments. American firms and investors are at a disadvantage because they don’t have competencies in evaluating and participating in these kinds of deals.

This is a dynamic to watch closely. European knowledge of private-public partnerships can help save money, but they can also cause PR nightmares: Virginia and Texas have faced criticism for granting road and bridge concessions to European companies. Using foreign money like the Qatari funds for even more building projects (and to create even more jobs) will also be a temptation. Federal and state governments should tread carefully here, particularly given the nationalist wave that Trump rode to victory.

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  • Observe&Report

    As long as due diligence is undertaken on the bidding companies and they do a good job at less cost to the taxpayer, who cares if they’re foreign companies?

    • FriendlyGoat

      The hat wearers should as a matter of evaluating their own votes, but they’ll probably never know what happens on much of anything.

      • JR

        huh?

        • FriendlyGoat

          The presumption of the MAGA hat wearers is that everything will be going “All American” in the future. It probably won’t, of course, but chances are most of them will never know the difference.

    • Jim__L

      Because if they’re foreign companies, that drains money from the US — and it will continue to drain money from the US if they’re allowed to collect rents on what they build.

      It’s a very, very bad idea.

      • Observe&Report

        How? Presumably they’ll be paying US corporation tax on those rents and profits as well as hiring US workers to build those projects; and when those workers spend their wages, that’s a wider boon for the economy.

        • Jim__L

          Draining money from the US is not a good thing. Taxes are a rake-off of a rake-off, and so perforce a smaller order of magnitude. Workers will be employed whether the company is foreign or not.

          Limiting certain classes of foreign investment is not a bad thing, particularly because it’s a bubble-in-the-wallpaper issue — push it down one place it pops up another. Foreigners who want to invest in the US find a way to do so even if their choices are limited.

          • Observe&Report

            That’s not how economics works. Foreign companies who earn returns on their investments pay the required corporation tax and take the rest home; they’re not “draining money from the US”. That’s like saying workers “drain money” from their employers in the form of wages. By contrast, US Fortune 500 companies have around $2.4 trillion stashed overseas in order to avoid paying nearly $700 billion in taxes.

            http://ctj.org/pdf/pre0316.pdf

            Which is more of a drain on the US economy, foreign companies taking home money their earned off their US investments AFTER paying their taxes, or US multinationals stashing money overseas so as NOT to pay their taxes?

            Bear in mind, also, that corporate tax revenue lost must inevitably be made up for out of the pockets of regular people and small businesses; people who can’t afford to pay Clinton six figures to sing their praises in secret. By the way, a quarter of that $2.4 trillion is owned by US tech companies who overwhelmingly backed Clinton.

            Limiting foreign investment in certain sectors makes sense if there’s a national security concern, but it makes zero economic sense.

          • Jim__L

            If the entire point of a well-defined set of projects is to make sure that prosperity stays local, it makes economic sense to limit investment to local-only, so that the profits stay local too. If offshore expertise were necessary, or if you could expand the projects you could pursue by borrowing funds from elsewhere, that would make sense. But neither case pertains here.

            Bringing up repatriation of cash is not to the point here, nor is bringing in trivia about tech companies.

            By the way, I’m flattered that you want the opportunity to invest in America. =) Have you considered investing in some of our ambitious enterprises, that could open up opportunities for all of humanity, for centuries to come? There are some exciting things going on in NewSpace these days…

            I hope that you don’t think we don’t like you because of wanting to keep the money for infrastructure projects for American companies. It’s just that the Trump presidency is about looking out for our own, which is something that Social Contract governmental theory (and hence democracy) is all about.

          • Observe&Report

            1) I don’t own a business or stock options and am therefore not a prospective investor, so kindly spare me the condescending expressions of “flattery”.

            2) YOU brought up the issue of repatriation of cash with your laughable claim that foreign investment will “drain money from the US”. US multinationals DO in fact drain money from the US in the form of tax avoidance schemes, and tech companies happen to be the biggest offenders. The fact that you think that’s trivial speaks volumes.

            3) A key part of this scam is the outsourcing of US jobs overseas. Since US companies can’t be taxed twice on overseas profits, multinationals have shipped numerous jobs out of the US and effectively laundered the profits through tax havens instead of ensuring that it “stays local” by investing it back in the US. This is easier for tech companies to do since their revenue comes from software rather than from a physical factory that can be closed down. But apparently all that is just trivia to you.

            4) The social contract is the theory of how societies form by giving up some rights and resources to an authority in exchange for protection and provision of other rights and resources (liking paying taxes to fund schools, hospitals, and infrastructure). In the context of how to fund infrastructure, this actually is trivia.

            5) Trump has promised $1 trillion in infrastructure spending which, if he succeeds, actually will bring plenty of local and national prosperity. Around the world, private enterprises have a much better trackrecord of efficient and cost-effective spending on such projects than governments do. If foreign investors aren’t allowed to participate, and since you obviously don’t care about the $700 billion in lost tax revenue due to outsourcing and the use of tax havens, where do you think the money is going to come from to pay for it all? Either a massive increase in your taxes (meaning less local prosperity), or a massive increase in federal borrowing, more likely both.

            State governments have their pension crises to deal with, and so can’t afford to cough up the money for infrastructure spending. Borrowing more money at the federal level means more money leaving the US in the form of interest payments to foreign investors. In other words, money will have to leave the country one way or another.

            6) The whole point here is to boost American prosperity by improving and expanding infrastructure. Americans will be the ones to reap the benefits of those brand new roads and bridges (and the extra prosperity that good infrastructure brings); which company builds and operates those roads and bridges makes zero difference.

            7) Even if it were true that foreign companies collecting rents on infrastructure which they happen to own were a bad thing (and you haven’t presented a single coherent reason why that would be the case), the public-private partnerships that the article talks about encompass an open-ended set of arrangements, including private-construction and public-ownership, or joint-investment by US and foreign companies with the possibility of joint ownership, or the fact that foreign companies will still need locally-sourced materials and labour, thus benefitting US companies either way.

  • Disappeared4x

    Qatar can fund the Republic of California’s high speed rail and the nation-state of Brooklyn’s BQX streetcar line, which will stop at the Queens new border wall. Confused? The link is to a Reuters report from Feb, 2014. Please add this, more specific Reuters report Tuesday, Dec. 13, 2016:

    http://www.reuters.com/article/us-qatar-usa-investment-idUSKBN1421AF
    Tue Dec 13, 2016 | 7:55am EST “Qatar sovereign fund tells Washington will invest $10billion in U.S. infrastructure: sources”

    Reminder to TAI from 2006: https://en.wikipedia.org/wiki/Dubai_Ports_World_controversy

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