StanCollender'sCapitalGainsandGames Washington, Wall Street and Everything in Between

Let's Hope It Is Just This Simple

06 Sep 2011
Posted by Andrew Samwick

Kevin Drum has joined the chorus, with "My Jobs Plan: A Trillion Dollars for Infrastructure:"

All of us have our fantasies about what we'd like President Obama to say in his big speech next week about jobs. Here's mine: ask Congress to appropriate a trillion dollars to be spent on infrastructure upgrades over the next five years. That's it. That's the jobs plan. A trillion dollars to make us into a first-world country again. And as part of the enabling legislation, ask for emergency powers to temporarily streamline the regulatory red tape, interagency approval processes, environmental-impact statements, and labor rules that might otherwise keep the money from being put to work speedily.

Will a Republican Congress agree to do this? Almost certainly not—at first, anyway. But building and repairing infrastructure is no boondoggle. It needs to be done, it needs to be done now, and it would be an easy sell to a public cynical about the government's ability to do anything concrete to help them. Make the case aggressively and you never know. Free money is free money, and even Republican voters like the idea of clean water, safe bridges, pipelines that don't blow up, electrical grids that work, and dams and schools that aren't crumbling.

So that's it. A trillion dollars for infrastructure. That's the plan. Let's do it.

I couldn't have said it better myself.  Just much, much earlier.

"even Republican voters like

"even Republican voters like the idea of clean water, safe bridges, pipelines that don't blow up, electrical grids that work, and dams and schools that aren't crumbling."

I'm no longer convinced this is true for most of the Tea Party - the above would need a "whites only" sign attached somehow for them to be happy.

I don't think it's "whites" as much as it's simply "me"

Tea party is all about "me" vs. "other people". I don't deny the (more or less conscious) racist element, but the fact of being opposed to "not-me" is generally more important.

For the TPs, "Other people make too much money, get to retire too early, don't own property and shouldn't get to vote, sponge off my taxes, have too many babies, etc,. etc.

Samwick Certainly Could (and did) Say it Better

Samwick should give himself more credit for what he wrote almost three years ago. I’m surprised he did not cite the following where the NYT asked several economists to suggest an ideal “stimulus program”. Samwick had, by far, the best answer which makes him look very wise and prescient, indeed.

But, what Drum has written is really not what Samwick was advocating earlier; not by a long shot. In fact, Samwick said “it” much differently, and better. What he wrote back then was that we shouldn't borrow to finance these projects. Rather, the US should have a long-term capital budget under which worthwhile infrastructure projects are scheduled and budgeted years in advance so that during a recession or times of high unemployment (while labor should be cheaper), such projects can be accelerated. That's a very sensible idea. Unless this is done, infrastructure projects meant to stimulate the economy would never get off the ground because they are not 'timely'. Unfortunately, it’s too late to do that and, as regards a “capital budget”, that’s a pipe dream given that the Senate has not even passed a normal operating budget in the past two years. Also, Drum doesn't say where he's going to come up with a trillion dollars over the next five years. I'm assuming he's not going to pick it from trees. Has Samwick changed his mind about that?

Indeed, the problem is that the administration did not heed his earlier advice. Had Obama (or Bush) planned this properly, they would have combined some temporary relief with longer-term infrastructure spending. While the money would not have been spent immediately, the business community and the markets would have been put on notice that it was on the way---signaling the markets, just like the Fed does. That alone is a benefit. Now, nearly three years later, that money would now be at work on properly vetted infrastructure projects. The money could have been put to use on projects that truly are "investments" and not just “stimulus” (a word that Samwick wisely suggested should be banned from our fiscal vocabulary).

Alas, due to lack of planning, we would need to borrow $1 trillion to produce jobs in the immediate term (read: before the next election), and that spending is bound to be wasteful and ineffective. Drum’s plan should also include a longer-term budget designed to pay for his $1 trillion infrastructure projects. Samwick could certainly have said it better--he already has.

From my view in the trenches,

From my view in the trenches, you are spot-on.

We've been stuck between trying to push projects out the door ASAP (mostly because of ARRA) and finding ways to cannibalize ourselves to meet statutory requirements. Not choices that we want to make.

Of course, I can't say much about things outside of transportation, but our funding mechanism appears to be the problem. Until that gets fixed (or tweaked) I don't see things changing.

Then again, every time the politicians hear "gas tax" they assume it will kill jobs and hurt the economy.

Yeah, let's build on Superfund sites

And underpay workers, guaranteeing that the most skilled electricians and carpenters will avoid these projects.

Well, at least there will be major repair expenses later on. But I'm still trying to figure out why the added health care expenses/greater mortality will be a feature, not a bug.

Go further than just "infrastructure"

Just using the term "infrastructer" and repeatedly using the term "roads and bridges" gives people the impression of huge numbers of road crews going around filling potholes. I like to say that "people are offering to loan the US money at historically low rates. We should use this cheap money to hire idle workers to use our idle capacity to build, repair or enhance economically useful things." In addition to roads and bridges that can mean enhancing freight and cargo systems (don't say "rail"), upgrading the power grid, rolling out 100mbps broadband everywhere, making homes and businesses more energy efficient, etc. These enhancements will allow the economy to function more efficiently/cheaply and since these structures and systems last for decades, the economic benefits will last a long time as well.

One idea I like for funding is to allow corporations to repatriate overseas dollars at a reduced tax rate provided the money is funneled through an "infrastructure bank." The money is loaned out for 3, 5 or 10 years depending on the project, the corporation holds I-bonds representing the money they've put in the bank, and the corporation pays a reduced tax rate on the interest and return of principal. So they get to repatriate their cash, but we make sure it's put to use first.

Right, More Junk Infrastructure...

Leading to more junk 'growth'.

The cost of existing infrastructure is the reason the blessed American Way of Life is in the crapper right now. It only pays off (allows a return) if its primary petroleum input costs less than $35 a barrel. At the current $115 or so, the entire fabric of American Life is underwater, including but not limited to its housing 'stock'.

Heaven forbid the establishment admit it made a mistake starting in 1948 building auto suburbs, then following with all the other childish mistakes: white flight, commodity agriculture, the military-industrial complex and non-stop wars, nuclear power, credit/asset bubbles, Reaganomics and financialism.

Every one of these things requires dirt cheap petroleum which is the one thing that is lost and gone forever ... and now the call is for more of the same? Gimme a f*ckin' break!

We need infrastructure, all right. Get rid of the four hundred nuclear time bombs around the world before they start blowing up with regularity. Doing so would employ millions and be a GDP investment right there.

Next, demolish suburbs, install millions of new organic farmers, remove the auto infrastructure -- by hand, if necessary, rebuild towns and cities without the auto in mind, cut militaries down to size, eliminate finance and basically start living within the solar energy (insolation) means.

This is what is going to happen, anyway. Time to get a grip before it is too late.

But, but . . .

my rep, Michele Bachmann, is promising gas under $2 a gallon if she is elected. She'll drill in the Everglades, if need be, to get us back to cheap energy.

I can't wait!

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