Stocks Are in for a Rude Awakening If They’re Riding Trump’s Infrastructure Plan

President Trump’s jinxed “Infrastructure Week” is here yet again but there is no indication that things could be different this time.
President Donald Trump
When it comes to infrastructure spending, President Trump has not delivered on his promises. | Image: JIM WATSON / AFP
  • Months before the general election, the White House is working on a $1 trillion infrastructure plan.
  • Trump campaigned on spending trillions to revamp the country’s roads, bridges, and airports.
  • The cost is likely to turn off many Congressional Republicans.

The stock market has turned bullish again following an announcement that President Trump’s administration is working on a $1 trillion infrastructure proposal.

According to reports, the majority of the proposed funds will go towards traditional infrastructure such as roads and bridges. Funds will also be allocated to rural broadband and 5G wireless infrastructure.

But if past infrastructure initiatives by the Trump administration are anything to go by, equity bulls are mistaken.

The Trump administration’s infrastructure plans have become something of a joke. “Infrastructure Week” has become a reference to any period in the administration’s life marked by extraordinary policy failures, chaos, or just plain incompetence.

There is no indication that this time will be different.

Here are five instances demonstrating that the new infrastructure plan is doomed like all others before it.

Infrastructure was a priority for Trump’s first 100 days

On the campaign trail four years ago, Trump promised that within the first 100 days of his administration, he would ask Congress to approve the American Energy & Infrastructure Act. The approval would lead to a $1 trillion investment in infrastructure.

Trump
Trump promised in 2016 to enact the American Energy & Infrastructure Act within the first 100 days of his administration. | Source: Twitter

However, the 100th day of Trump’s presidency passed without this happening.

Inaugural infrastructure week overshadowed by bombshell testimony

The initial Infrastructure Week was to take place in June 2017.  But the Trump White House didn’t release any plan for the event intended to garner support for a $1 trillion infrastructure plan.

What’s more, ex-FBI director James Comey was testifying before Congress. This was weeks after he had been fired by Trump, resulting in Deputy Attorney General Rod Rosenstein appointing Robert Mueller to head the Russian investigation.

Comey’s testimony ended up sucking in all the media attention. Trump didn’t help matters as he couldn’t stay on message. Instead of focusing on infrastructure, Trump attacked his political rivals and Democratic policies.

Trump
The inaugural Infrastructure Week was a disaster, and the jinx is yet to be broken. | Source: Twitter

Both political parties also opposed a proposal to privatize air traffic control.

$1.5 trillion infrastructure proposal but only $200 billion of federal funds

In February 2018, Trump launched a third attempt at Infrastructure Week. He tried to galvanize support by lambasting trillions of dollars spent on foreign wars, saying the money could have been better spent on domestic projects.

Infrastructure Week
Trump has repeatedly claimed that $7 trillion was spent on Middle-East wars. | Source: Twitter

While there was an actual plan this time, it was grossly inadequate. Under the $1.5 trillion infrastructure plan, the federal government would provide just $200 billion. States and private businesses would raise the balance of $1.3 trillion.

And like so many Infrastructure Weeks, unrelated events quickly overshadowed the event. This included the resignation of a senior White House staffer over domestic abuse allegations. Special Counsel Robert Mueller also indicted Russian trolls for meddling in the 2016 election around the same time.

Trump Investigations put roadblock on infrastructure negotiations

Last year, the Trump White House was all set for negotiations with the Democrats on a possible $2 trillion infrastructure plan.

But a meeting with Democratic leaders Chuck Schumer and Nancy Pelosi quickly hit a wall. At the White House, Trump walked out of the meeting, arguing he would not work with Democrats unless they stopped investigating him.

Trump later said at a press conference:

I walked into the room and I told Sen. Schumer and Speaker Pelosi, ‘I want to do infrastructure. I want to do it more than you want to do it. ‘But you know what? You can’t do it under these circumstances. So get these phony investigations over with.’

Infrastructure
Trump hasn’t been able to find common ground with Democrats. | Source: Twitter

Trump’s “VERY BIG & BOLD” $2 trillion proposal

After signing a $2 trillion relief bill in March, Trump proposed spending another $2 trillion on infrastructure. He argued then that the zero interest rate environment was conducive for borrowing.

Trump
Trump wanted $2 trillion spent on infrastructure immediately after inking a $2 trillion relief bill. | Source: Twitter

But Republicans balked at the amount. Republican John Barrasso, who chairs the Senate’s Environment and Public Works Committee, instead pushed for a $287 billion highway plan. Both parties backed this plan.

Infrastructure Week
Republicans are not enthusiastic about spending $2 trillion on infrastructure. | Source: Twitter

Yet again, a grand Trump infrastructure plan did not materialize. The only question is, what will be different this time around?

Disclaimer: This article represents the author’s opinion and should not be considered investment or trading advice from CCN.com.

Sam Bourgi edited this article for CCN.com. If you see a breach of our Code of Ethics or find a factual, spelling, or grammar error, please contact us.

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