PWBM Infrastructure Analysis has Impact on White House

Philadelphia Inquirer reporter Erin Arvedlund digs into recent a recent post from the White House about PWBM’s analysis of the White House infrastructure plan and PWBM’s response. “War of Words Between Wharton and Trump White House,” compares the White House’s statement that PWBM lacks transparency with the model equations and methods made available by PWBM. PWBM is excited to see the White House engage with our work and we look forward to further discussion.

The article states that, “Wharton economists Kent Smetters and Kimberly Burham never expected the Trump White House to take issue with the latest version of their extremely dry economic model, which predicted less-than-expected growth from President Trump’s proposed $200 billion federal government infrastructure funding.”  

PWBM applies real world evidence about the type of capped grants in the White House plan. We find that the plan will produce $20 billion to $230 billion of new infrastructure, including the $200 billion from the federal government (Figure 1). Other types of uncapped, but more expensive, grants may lead to more new infrastructure.

Figure 1: Three Options for State and Local Government and Private Sector Response to Federal Aid for Infrastructure

Net Change to Infrastructure Spending by Federal, State and Local Governments Under the White House Infrastructure Plan,
(billions of dollars)
Federal Spending Program White House Plan
(billions of dollars)
Low Medium High
Incentive Grants 100 0 50 100
Rural Formula Funds 50 0 25 50
Transformative Projects 20 0 20 40
Infrastructure Financing Programs 20 10 20 30
Federal Capital Revolving Fund 10 10 10 10
Federal Spending 200 200 200 200
Net Total Spending 1,500 20 125 230

Note: Under each of the above options the federal government spends $200 billion.