Trump plan reverses 'revenue sharing'

President Trump has a nationwide infrastructure plan, but it's heavily dependent on state funding. The federal government will kick in just $200 billion of the $2 trillion proposal.

This "I'm going to buy myself a nice present; you guys get to pay for it" strategy made me think back to the not-so-long-ago old days when the federal government was offering "excess" funds to the states. The Nixon administration called it "revenue sharing." The federal government would use its expansive tax collection system to take money from taxpayers' pockets and would offer some of these funds to the states in the form of "revenue sharing" grants.

A few people at the time recognized the fact that the federal government was running a budget deficit (though nothing nearly as large as today's deficits) year after year. The United States didn't have money to give to the states without borrowing that money. "Revenue sharing" was really federal debt sharing.

Cliff Blue, a newspaper editor/owner from Moore County, state legislator and former speaker of the N.C. House, railed against revenue sharing repeatedly in columns he distributed to newspapers in North Carolina. I became familiar with Blue in the late-1970s. Nixon had resigned the presidency, but his "revenue sharing" scheme survived his embarrassing fall from power. Blue continued to complain about the states falling for the false promises of free money from the feds, who were taking money from taxpayers and scattering it like manna from heaven.

By the time Blue died in 1990 at age 79, "revenue sharing" was dead and buried, but federal grants to various local governments, nonprofits and others have continued. They just don't call it "revenue sharing" anymore.

The Trump infrastructure plan proposes a sort of reverse revenue sharing, in which the states would provide most of the funding on federal projects to build roads, airports, bridges and other infrastructure. If Nixon's "revenue sharing" lacked logic, this one is even more lacking. States are not flush with cash and have been aggressively cutting taxes to appear more attractive to business, industry and retirees. North Carolina's personal income tax rate is now about 5%, and legislative leaders want a constitutional amendment to make 5% the maximum income tax allowed. The new federal personal income tax tops out at 37%. Guess which one raises the most revenue.

I can agree with Trump and others who say America needs to improve its infrastructure, but the Trump proposal can't pass. States, many of whom are constrained by laws that require annual budgets be balanced, don't have the money that the Trump plan demands.