The thinking person's guide to infrastructure: instead of embracing Donald Trump's vision for gargantuan and indiscriminate building projects, Congress should insist that any federal infrastructure legislation be focused on delivering what the market says Americans want: walkable communities.

• Author: Leinberger, Christopher B.

About the only issue on which Donald Trump and Hillary Clinton agreed during the 2016 presidential race was the need to rebuild America's infrastructure--roads, bridges, mass transit systems, and the like. In fact, Trump proposed spending twice as much on infrastructure as Clinton did. That endeared him to his base voters, who saw it as a concrete (literally) manifestation of his promise to "make America great again."

The country's infrastructure, particularly surface transportation, is certainly in sorry shape. The American Society of Civil Engineers rates the overall condition of our bridges as C+ and our roads and mass transit systems as D. Many of these structures, built decades ago, are reaching the end of their useful lives.

Under pressure from traditional conservatives in Congress, who are no fans of big domestic spending projects, Trump has been shy about the details and timing of his plan. But in his February speech to Congress, he reiterated his intention to push for major legislation.

Indeed, Trump has profound political and personal reasons to fulfill the promise he made during the campaign. His whole professional identity, after all, revolves around the creation of steel and concrete structures (usually built by others) with his name on them. And an infrastructure build-out of the size he has talked about--upwards of $1 trillion--would surely juice an already growing economy and provide well-paying jobs for many of the non-college-educated white male voters who supported him.

Moreover, some close Trump advisers see infrastructure as a way to pull Democratic voters, including some minorities, into a new political coalition that will remake the Republican Party and keep it in power for decades. "With negative interest rates throughout the world, it's the greatest opportunity to rebuild everything," Trump campaign CEO and now chief White House strategist Steve Bannon told the Hollywood Reporter soon after the elections. "Shipyards, ironworks, get them all jacked up. We're just going to throw it up against the wall and see if it sticks. It will be as exciting as the 1930s, greater than the Reagan revolution--conservatives, plus populists, in an economic nationalist movement."

Such grandiose political hopes aside, many Democratic lawmakers are clearly open to working with Trump. In fact, Senate Democrats have proposed spending the same amount on infrastructure as Trump has: $1 trillion. That is far more than most GOP lawmakers are comfortable spending. But precisely because of that Republican resistance, Trump will almost certainly need large numbers of Democratic votes to pass any substantive infrastructure bill. That means Democrats will likely have significant leverage in determining the shape of such a bill.

What should Democrats demand in return for their support? For one thing, that Trump drop the idea his advisers floated in December for $85 billion in new tax credits for infrastructure investors. The private sector must be involved in America's infrastructure build-out, but tax credits are a very expensive way of making that happen. Tax credits attract private investors and corporations needing high rates of return to offset their tax liabilities--returns in the range of 18 to 35 percent annually. But infrastructure investments don't typically produce those kinds of high returns unless the risks are somehow shifted onto others, typically taxpayers. With interest rates at 3 percent, it's much cheaper and less risky to the public for the federal government to simply borrow the money and have it paid back by local sources, both public and private.

Even more importantly, liberals should recognize that it is no longer 2009. Back then, to stabilize an economy in free fall, Democrats passed a massive stimulus bill with tens of billions of dollars devoted to whatever "shovel ready" projects state transportation departments happened to have on the shelf--widening interstates, paving rural roads, and so on.

Today, with unemployment low and economic growth steady, there's no need for an immediate Keynesian stimulus. Nor is it in Democrats' political interests to embrace the Trump-Bannon vision for gargantuan and possibly indiscriminate building projects. In this, they have, unexpectedly, reason to make common cause with their fiscally conservative GOP colleagues.

Instead of agreeing to open the federal funding spigot and spraying infrastructure dollars haphazardly, Democrats and their conservative Republican allies should insist that any federal infrastructure legislation be focused on a long-term strategy based on two simple questions: What do Americans want their communities to look like twenty-five years from now? And what unique set of infrastructure investments will get them there?

Answers to these questions are already out there, as revealed by Americans' choices in the marketplace. Almost every market metric we have--particularly in shifts in for-sale housing and rental prices--indicates a vast unmet demand for homes and commercial spaces in or near what real estate professionals call "walkable urban communities." These are relatively densely built places where people can get to stores, parks, restaurants, bars, and movie theaters, as well as to their jobs, without having to use their cars. "Walkable urban" doesn't necessarily mean city living, though the revitalization of American cities is strong evidence of the trend. Suburbanites, too, want walkable urban places in their communities, as shown by the popularity of new suburban "town centers" in places like downtown Bellevue, Washington; Piano, Texas; and Reston, Virginia. Small-town Americans also are seeing their traditional, often neglected town squares and main streets come back to life, in places such as Albert Lea, Minnesota, and Batesville, Arkansas.

The problem is that demand for walkable places far outstrips supply, artificially jacking up real estate prices in these communities--consider the insane rents and sale prices today in Brooklyn's Park Slope, Chicago's Lincoln Park, or the Virginia Highland neighborhood in Atlanta, compared to other parts of their metropolitan areas. This phenomenon, otherwise known as gentrification, makes it seem as if only the affluent want walkable neighborhoods, when in fact their appeal transcends class, race, geography, and political inclination. These price premiums suggest that the market is saying, "Build more of this stuff."

This is not to say that all American communities, households, and businesses are rejecting drivable subdivisions, strip malls, and business parks. These are the exact types of communities many Americans, probably a slight majority, want. But we have vastly overbuilt this type of development; the market has been more than satisfied.

A major reason for this mismatch between market demand and supply is federal infrastructure policy that favors drivable development at the expense of walkable urban development. For instance, the feds have long been far more generous in subsidizing the building and widening of interstate highways that funnel traffic out to the distant suburbs than in funding rail, bike, and pedestrian improvements that make walkable neighborhoods practical. That policy bias resulted in this vast overbuilding of low-density suburbs on the metropolitan fringe--development that sparked the Great Recession and made it much deeper and longer than it otherwise would have been. The prices of homes in exurban communities such as Riverside County, outside Los Angeles, and Prince William County, outside Washington, D.C., plummeted and in many cases have still not returned to their pre-recession levels, leaving many homeowners with mortgages that remain underwater.

Any new infrastructure bill should aim to use precious and limited federal tax dollars in a way that enhances the market's own ability to deliver the kind of real estate development Americans clearly want, instead of providing what would essentially be a bailout for an out-of-date development model. Creating federal infrastructure policy that encourages the walkable developments millions of Americans crave would unleash a virtuous cycle of change. It would attract hundreds of billions, perhaps trillions, of private-sector dollars to residential and commercial real estate markets that have not fully recovered from the Great Recession. Today, in the midst of a reasonably strong economy, we are building fewer new housing units per capita than during recessions over the past sixty years. The flow of investment to satisfy this pent-up demand would last a generation, not unlike the postwar drivable suburban boom. Because the so-called built environment (infrastructure plus real estate) is...