I had mentioned how I thought the current rash of bailout money was motivated by “starve the beast” impulses. In some ways, however, I wonder if it might have the opposite effect. Instead of making people think we don’t have the money to do anything else, it might instead make people think they were being lied to in the past — before the $700 billion — when they had been told that there wasn’t enough money with which to enact programs that might make their personal lives any better. (National health insurance being one of them.)
With the announcement of 500,000 jobs lost in November, the worst monthly job lost since the Ford administration, Barack Obama has announced plans for spending on infrastructure, the likes we haven’t seen since the Eisenhower administration.
The plan, as Obama laid it out Saturday, would include massive investments in roads and other infrastructure programs reminiscent of President Dwight D. Eisenhower’s highway program that employed millions of people and cost tens of billions of dollars. Obama said he would compel states to move quickly on construction projects or risk losing the help from the federal government.
“We will create millions of jobs by making the single largest new investment in our national infrastructure since the creation of the federal highway system in the 1950s,†he said. “We’ll invest your precious tax dollars in new and smarter ways, and we’ll set a simple rule – use it or lose it. If a state doesn’t act quickly to invest in roads and bridges in their communities, they’ll lose the money.â€
Obama said his plan would include a push to make federal buildings more energy efficient by installing new heating systems and energy-saving light bulbs, a plan that, he said would save billions of taxpayer dollars and “put people back to work.â€
Additional provisions would upgrade public school buildings, enhance broadband technology and create a system to ensure that Americans have access to electronic medical records.
I was debt averse by nature before becoming employed and being a debt collector has multiplied that aversion. Intellectually, I know that investing in infrastructure and other capital can result in long term benefits that outweigh the debt incurred. On a more visceral level, I don’t quite feel it. Still, Obama’s plan to invest in roads, bridges, and other tangible things is a lot more comforting to me than throwing money at banks chasing toxic paper or other investment instruments. If a state takes money for a road, and no pavement gets laid, I can pretty comfortably know that something went very wrong. If a bank takes money and does nothing but pay executive bonuses and the toxic paper remains toxic, I’ll be none the wiser.
I learned the hard way (not as hard as others) to be debt averse. I was one of those “book smart not street smart” college students who fell for the easy credit cards in the late eighties/early nineties.
The toughest thing is looking at your credit card bill and seeing intangible items – like that $20.00 pizza delivery you could have made at home for $3.00, that now with interest turns into a $35.00 pizza. A sweater purchase is different — you still have the sweater. The pizza is long gone, but you’re still paying for it.
Intangible items on your debt — like a costly war in Iraq. A bailout of financial companies who are now hoarding their cash instead of handing out loans because “Americans are now a bad credit risk” (never mind that the BANKS are a worse credit risk and we gave THEM money). Those are the tough items to stomach.
Roads, bridges, people at work – tangible items.
For starters, much of our infrastructure problem comes from the Feds dumping that extraordinarily expensive interstate system, which so far we have been unable to fully maintain, back onto the states. So turning around and pummeling them now for non-compliance would be in the best recent traditions of the Republic.
And much of that is due to our having substituted, over the past three decades, a facile notion of smaller government for actual fiscal responsibility, while achieving neither.
The leaves have barely fallen to end a summer of gas panics, and here we’re talking about spending hundreds of billions on a system that benefits the producers (or importers) of small plastic crapola and the regressively-taxed carbon-belchers that transport it (frequently with a sign on the back informing imperiled motorists in the vicinity how horribly unfair the poor trucking company’s taxes are) across the country. And the damn things are in poor shape in the first place because we cut maintenance costs the better to afford, e.g., a dozen new aircraft carriers, the dead-before-it-arrived Star Wars program, and the price of a new stadium in turn-around costs every time we launch a space shuttle. And that’s assuming it comes back.
By the way, since the building of the American Autobahn, only one administration has budgeted more money for non-highway infrastructure than for the constant upkeep needed to keep Stucky’s in business: that of James Earl Carter, History’s Greatest Monster.
Except that with tangible, long-term infrastructure investments the government spending gains a long-term return on the investment. So many government buildings (libraries, schools, post offices) were constructed during the New Deal that they’re easy to find. Many are still in use.
The idea here is not necessarily to go into debt to obtain that long-term return but to employ classic Keynesian economics on a massive scale. Right now demand is falling across many sectors. According to Keynes, the government is the only institution left that can generate demand on a large enough scale to actually have an impact. By spending money now on projects the economic impact can lesson the severity of a downturn and in the long term increase economic activity by elevating the available ceiling.
That’s the thought at least. And don’t forget that Keynes advocated deficit spending to achieve it. Lest you think we’ve tried this before during the Great Depression, we really didn’t, as FDR let up on the gas in 1937 and saw the economy take a double-dip as unemployment rose.
If the Federal Government insists on pumping billions of dollars into our economy to stimulate demand, it is a wise choice to use road construction as an industry in which to spend it. At least with infrastructure investment, it is reasoable to assume that the end result will be a trasportation system that can move people and products from point A to point B in a more efficient manner. This does enhance our country’s potential productivity albeit a minimal enhancemnent.
There are far less important things that they could and are dedicating funds to.