The risks? Time. Underplanning. Waste. But necessary. At the beginning of this month, Mr. Obama addressed the nation, talking about upgrading government buildings, building out the fiber network that carries the Internet, and generally expanding and repairing our infrastructure: “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… 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.” His program, he noted, has set a goal of 2.5 million new jobs by 2011. There was no estimated price tag for this effort.
By December 20, that jobs number moved up 500,000 to 3 million total saved or newly created jobs… as economists suggested that at current rates, the unemployment rate could easily top 9% in 2009 (almost 17% if you add in full-time job seekers only able to generate part-time work and people who have just plain run out of places to look for work). If that terrible number hits, we would be losing an additional 4 million jobs, still falling 1 million short of where we are now, and it is virtually impossible to ignite new infrastructure employment fast enough to fill even a quarter of those jobs by the end of 2009.
According to the December 26 Wall Street Journal, if the holiday retail picture is any indication of employment (where sales fell, compared to last year, from a paltry 2% for online shopping up to 27% and 35% for appliances and luxury items, respectively… auto sales are even worse), we are in for a rough couple of quarters. Engaging people for infrastructure and educational work, creating new jobs and holding old ones, unfortunately will not happen overnight, even if Congress acts quickly.
Except for needed repair work on the simplest of these projects, infrastructure growth and repair efforts are often complex, multiyear projects. If this were a short “recession,” it would be over by the time most structures became heavily invested. Not to worry… looks like we are going to be here awhile. These projects usually take years to complete. But we can also look at the lesson in Japan from the 1990s, a nation that held back, waited to implement much-needed infrastructure upgrades, drizzled the money slowly into their system, and managed to remain in a recession for a full decade. The good news is that if properly implemented, infrastructure development does create long term sustainable values – it’s more of an investment than a pure expense. The President-Elect seems to be on that page.
Mr. Obama had also listened at the governor’s conference earlier this month, and their message was clear: have a plan, do it right, it will take time, but we desperately need the money really soon. Sure, many of these projects have been engineered, budgeted and prepared to go… put on hold by obvious economic pressures. But this is not a “we can get this done this year” solution. According to the December 3 Washington Post: “[L]ess than half of the $136 billion in projects [that the states] said were ready to go could get underway within the next six months, according to the National Governors Association. And choosing among those projects could prove politically difficult, some governors said.” For most projects, they would get only a quarter of the way through a major construction program even in a year.
The “other” infrastructure project – education – doesn’t have a price tag yet, but the December 20 New York Times noted: “For education, besides money to build and renovate schools, Mr. Obama will call for money to train more teachers, expand early childhood education and provide more college tuition aid.” The success will be in the planning. For those states getting old world infrastructure grants, the new administration is letting local governments set the pace, at least initially, but I suspect the guidelines for rebuilding our educational system will have a more federally-directed tone.
We know what spending quickly without direction is like: Treasury’s Trouble Assets Relief Program (TARP) produced a bailout policy that seemed more like dragging your feet on the ground to stop a speeding car. With pressure to have at least $675-$775 billion (perhaps larger) stimulus package on President-Elect Obama’s desk when he takes office in January, the “easy” button seems dangerously familiar. According to an article reported on December 31st by the Associated Press: “Government officials overseeing [the] $700 billion [TARP] bailout have acknowledged difficulties tracking the money and assessing the program's effectiveness.. The information was contained in a document, released [Dec. 31], of a Dec. 10 meeting of the Financial Stability Oversight Board. The panel, headed by Federal Reserve Chairman Ben Bernanke , includes Treasury Secretary Henry Paulson and Securities and Exchange Commission chief Christopher Cox.”
Republicans on the Hill, still smarting over the misapplication of TARP funds by a Republican administration, are fighting to slow the next bailout process down: “Concerned by Democrats' push to enact the massive bill into law within days of Obama's Jan. 20 inauguration, Senate Minority Leader Mitch McConnell (R-Ky.) and House Minority Leader John A. Boehner (R.-Ohio) issued calls for a lengthy vetting of the stimulus proposal, whose price tag could top $850 billion when it is completed next month.” (Washington Post, December 30). The process could slow passage by a month or more. But the nation is in immediate pain; there is no simply right answer.
Not to mention the battles among federal agencies over who has jurisdiction over infrastructure projects – and then there is issue of how to deal with State politics. The battles between the Department of the Interior and the Army Corps of Engineers alone could fill lengthy books. Add the Department of Commerce, the Department of Labor, the Department of Energy, the Department of Transportation, the Environmental Protection Agency… well, you get the point.
There does seems to be a need for a domestic program rebuilding czar, a super-cabinet position to make sure that jurisdictional battles do not thwart much needed and well-directed educational and job funding. A big misstep at this point and 1929 might produce a big sister.
I’m Peter Dekom, and I approve this message. Have the best New Year you can!
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