The Heavy Weight of Donald Trump’s Infrastructure Program


The US President announced a USD 1.5tn infrastructure plan. USD 1.3tn of the funding was shifted to states and local governments. The latter are unlikely to support the initiative as they are deleveraging. Amid lower taxes, tax-exempt municipal bonds might lose appeal. To issue debt, local governments will face higher rates. Higher state and local taxes are likely, thus weakening the stimulus impact of recent tax cuts.