Shaping a turd into a circle and poking a hole in the center does not make a donut. Some who otherwise abhor Donald Trump are still enamored with his pledge to rebuild infrastructure, a very necessary priority, but they’re neglecting to notice the details of his plan reveal a cruller made of crap.

President Obama noted recently in a Carnegie Mellon address that the government is here to do the hard, unglamorous, unprofitable work that private enterprise wants no part of, “dealing with problems that nobody else wants to deal with.” The Trump plan, however, will neglect the tough jobs that could pay off long-term dividends (e.g., repairing highways, modernizing schools, etc.), instead being a windfall for a few without a return for the many.

From Lawrence Summers at the Financial Times:

I have long been a strong advocate of debt-financed public investment in the context of low interest rates and a decaying US infrastructure, so I was glad to see Mr Trump emphasise it. Unfortunately, the plan presented by his advisers, Peter Navarro and Wilbur Ross, suggests an approach based on tax credits for equity investment and total private sector participation that will not cover the most important projects, not reach many of the most important investors, and involve substantial mis-targeting of public resources.

Many of the highest return infrastructure investments — such as improving roads, repairing 60,000 structurally deficient bridges, upgrading schools or modernising the air traffic control system — do not generate a commercial return and so are excluded from his plan. Nor can the non-taxable pension funds, endowments and sovereign wealth funds that are the most promising sources of capital for infrastructure take advantage of the program.

I am optimistic regarding the efficacy of fiscal expansion. But any responsible economist has to recognise that, past a point, it can lead to some combination of excessive foreign borrowing, inflation and even financial crisis. As Dornbusch showed, in emerging markets this can happen quite quickly. In the US the process would take longer.

Even without taking account of the likely costs of the infrastructure plan (which the Trump team badly underestimates) or the proposed defence build-up, the Trump tax reform proposals are too expensive. Many, like the proposed abolition of the estate tax, will only benefit the high-saving wealthy.•