Trump’s 50-year mortgage proposal is interesting. Obviously, the exact same financial principles apply to long-term, fixed rate infrastructure project finance — a longer term means lower debt service payments due to slower amortization. Yes, there’s higher total interest cost on an undiscounted basis, but you can prepay a home mortgage (or a WIFIA loan) without penalty if and when your income (or revenue stream) improves. The long loan term is an option that makes a home (or a project) more immediately affordable relative to your current budget (or current taxpayer/ratepayer willingness to pay).

[Update: Maybe the financial principles are the same, but the customer base for home mortgages is very different than that for infrastructure project finance. In effect, the backlash (which has been huge) is saying that homeowners won’t treat a 50Y term as an option but as the non-prepayable base amortization, either through misunderstanding or lack of discipline. Critics have a point here — and so the proposal can be characterized as another way for the US financial sector to press down the crown of indebtedness upon the brows of the 90% masses.

Axios also pointed out that the 50Y mortgage interest rate might be higher — this is probably true for a number of factors which don’t affect pricing for longer-term federal loans. I think the article’s estimate might be overstating the scale, especially because a 50Y product will have to compete with existing 30Y alternatives — people can and will compare monthly payments. But who knows?

Which brings up a major lesson to be borne in mind when advocating for longer WIFIA loan terms: Trump and his people botched the announcement completely, assuming a degree of financial sophistication that isn’t there and not carefully providing (or even thinking about?) the details. Can’t do this thing kind of thing in a soundbite, especially via a self-aggrandizing meme. Lesson noted.]

However, it’s not clear if the same motivation for extending home mortgage terms will apply to extending WIFIA loan terms (e.g., from current 35 years to 55 or 75 years, depending on project useful life).

Trump’s motivation could easily boil down to a cheap political trick to improve his falling polls, possibly with (worse) a neoliberal subtext for home builders, private equity investors and the other usual suspects. Which is to say “longer loan terms are for mass politics and the private sector, not for public finance or publicly owned infrastructure. Go to the muni bond tax-shelter tax-exempt market for infrastructure project finance. Or better — sell your project to a P3 investor and then we can talk about what easy federal finance they’ll get.”

But pitching the idea with a comparison to FDR? Really? The original scourge of unbridled capitalism, whose New Deal progressive liberalism was exactly what the 1980s “greed-is-good” neoliberal narrative was reacting to? Does this indicate some sparks of post-neoliberal thinking in the Administration? I doubt Trump himself knows or cares too much about the history or the principles here. But did someone or some group in the Administration with a post-neoliberal agenda suggest the FDR comparison to him, hoping to use it as ammunition in what are doubtless fierce internal struggles?

Or, more cynically, is what we’re seeing some part of a neoliberal ‘neo-narrative’ that looks ‘populist’ in the same way that the 2008-2024 neoliberal narrative looked ‘woke’? That is, designed to camouflage neoliberal ‘looting business-as-usual’?

I guess we’ll find out in due course. What happens with WIFIA and other federal infrastructure finance programs over the next year will likely provide some uncamouflaged indications.