World Class Faculty & Research / November 10, 2016

Trump’s Infrastructure Pledge Doable, Morici Tells BBC

SMITH BRAIN TRUST — To what extent will president-elect Donald Trump and Congress deliver on a campaign pledge to rebuild U.S. infrastructure? Professor of international business Peter Morici at the University of Maryland’s Robert H. Smith School of Business told BBC News on Wednesday that tightening certain entitlement programs could offset long-term projects like improving the passenger railway system.

Trump in his presidential election acceptance speech pledged to fix U.S. inner cities and rebuild highways, bridges, tunnels, airports, schools and hospitals. "We're going to rebuild our infrastructure, which will become, by the way, second to none," he said.

"There aren’t a lot of shovel ready projects around," Morici said. "But the economy isn't in deep recession." So look for long-term rebuilding opportunties. "Compare Pennsylvania station in New York City, which is an extraordinarily busy structure in the American system for passenger rail, to the railway station in Oslo, and America looks like a third-world country,” Morici said. “If you ride the Amtrak train from Washington, D.C., to New York, the U.S. seems like a second-world country.” (This recent Atlantic article describes Amtrak’s Northeast corridor infrastructure woes and notes “passengers are prone to griping about the delays and slow service along the route, not to mention the food, the seats and the wireless Internet.”)

Refurbishing Penn Station “is well within our grasp," Morici said. “It’s very doable and can be paid for.” Morici said money to offset such infrastructure spending could come from targeting potential waste in certain entitlement programs. “Right now we have one out of 20 working age individuals between the ages of 16 and 65 on social security disability. If you go back 25 to 30 years, it was a small fraction of that." Implementing health care cost controls could create another potential source of revenue, albeit tougher to attain. Morici said Trump will likely move to repeal the Affordable Care Act, but he won’t have enough leverage to repeal the subsidies that people receive to buy health insurance, "especially given how much insurance rates have gone up under Obama.” The only way to reduce insurance rates is to reduce prices, he said. 

“Americans are paying 50 percent more than Germans pay for basic health services," Morici said. “We both have private insurance systems, but the Germans regulate prices. Unless Trump is willing to regulate prices like the Germans do, his goose is cooked on that subject. He can’t fix it.”

Listen to the full interview on BBC's Business Matters.

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About the University of Maryland's Robert H. Smith School of Business

The Robert H. Smith School of Business is an internationally recognized leader in management education and research. One of 12 colleges and schools at the University of Maryland, College Park, the Smith School offers undergraduate, full-time and part-time MBA, executive MBA, online MBA, specialty master's, PhD and executive education programs, as well as outreach services to the corporate community. The school offers its degree, custom and certification programs in learning locations in North America and Asia.

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