The other day, President Trump said that Congress should pass a $2 trillion package of infrastructure work in order to help get the economy back on track after the virus shutdown. The President said that with interest rates at historic lows, the country should borrow the money needed and do the construction work at relatively low cost. Doing two trillion dollars worth of construction work over 2 or 3 years will provide a substantial boost to the economy at a point when it will be sorely needed.
This proposal has brought out the usual suspects to oppose it. Even some others have cast a jaundiced eye at the call for the construction work. Most of the criticism, however, misses the point. Here are some of those complaints.
1. We can't do infrastructure work now because most people are stuck at home under the social distancing rules. I heard Rush Limbaugh make this point on his show today, for example. This complaint, however, is based upon a misunderstanding of how construction works. These people think the President is going back to the old lie of the Obama stimulus package which was that money would be used for what were called "shovel ready" jobs. Those jobs were supposedly ready to go but just awaiting cash which the government provided. Of course, there were very few shovel ready jobs, so much of the Obama stimulus was used for ordinary maintenance done by cities and towns. Very little additional work was commenced, but the cash that otherwise would have been used by the towns/cities/states was shifted to other uses. The Obama stimulus was a way to shovel cash to the local governments.
Trump, however, understands construction and how it is done most likely better than any president in American history. Trump is talking about "big and bold" infrastructure work. For example, a new rail tunnel is needed between New York City and New Jersey. This new stimulus bill could provide money for such a project. Of course, the actual construction wouldn't be done immediately while people are stuck in quarantine at home. First, there would need to be project selection and then design work. All the roadblocks of local approvals could be reduced by Congress passing special rules to govern these stimulus infrastructure projects.It might take many months before these projects would commence actual construction. Once everyone gets back to work, the projects could start hitting the market. More and more workers could be hired to carry out these projects. These are the sorts of jobs that might last for one, two or even three years. It would be a major boost to the economy.
2. A second complaint is that we don't have enough jobs for this to make a material difference in the economy. That's just silly. If Congress were to authorize states to compile a "wish list" of these sorts of projects, I doubt that there would be even a single state that couldn't compile a list long enough to use up the available funds.
3. A third complaint is that the President wants to shovel cash to places that will help him politically but not to places that will be likely to oppose him in November. This is truly stupid. it would be easy enough for Congress to award something like 80% of the funds to the states based upon population and 20% based upon specific infrastructure needs (like for airports or bridges, etc.) It would be extremely easy to assure that no real favoritism would come out of the construction package.
4. Perhaps the funniest complaint that I've heard from some Democrats is that infrastructure construction never works to help the economy. This is funny because the whole idea of using infrastructure construction to get the economy moving was begun by Franklin Roosevelt and the Democrats during the Depression of the 1930s. There are countless public buildings and structures that were built for just this reason. The Tennessee Valley Authority and Hoover Dam are examples of major items built in the 1930 for this purpose. Then Obama and the Democrats claimed to be doing the same thing in 2009 (although they didn't actually build much as discussed above.)
The truth is that in a carefully thought-out program of infrastructure construction designed so that the projects would be new ones needed across the nation, Congress could provide a huge boost of the economy that would get us moving back to full employment and prosperity.
This proposal has brought out the usual suspects to oppose it. Even some others have cast a jaundiced eye at the call for the construction work. Most of the criticism, however, misses the point. Here are some of those complaints.
1. We can't do infrastructure work now because most people are stuck at home under the social distancing rules. I heard Rush Limbaugh make this point on his show today, for example. This complaint, however, is based upon a misunderstanding of how construction works. These people think the President is going back to the old lie of the Obama stimulus package which was that money would be used for what were called "shovel ready" jobs. Those jobs were supposedly ready to go but just awaiting cash which the government provided. Of course, there were very few shovel ready jobs, so much of the Obama stimulus was used for ordinary maintenance done by cities and towns. Very little additional work was commenced, but the cash that otherwise would have been used by the towns/cities/states was shifted to other uses. The Obama stimulus was a way to shovel cash to the local governments.
Trump, however, understands construction and how it is done most likely better than any president in American history. Trump is talking about "big and bold" infrastructure work. For example, a new rail tunnel is needed between New York City and New Jersey. This new stimulus bill could provide money for such a project. Of course, the actual construction wouldn't be done immediately while people are stuck in quarantine at home. First, there would need to be project selection and then design work. All the roadblocks of local approvals could be reduced by Congress passing special rules to govern these stimulus infrastructure projects.It might take many months before these projects would commence actual construction. Once everyone gets back to work, the projects could start hitting the market. More and more workers could be hired to carry out these projects. These are the sorts of jobs that might last for one, two or even three years. It would be a major boost to the economy.
2. A second complaint is that we don't have enough jobs for this to make a material difference in the economy. That's just silly. If Congress were to authorize states to compile a "wish list" of these sorts of projects, I doubt that there would be even a single state that couldn't compile a list long enough to use up the available funds.
3. A third complaint is that the President wants to shovel cash to places that will help him politically but not to places that will be likely to oppose him in November. This is truly stupid. it would be easy enough for Congress to award something like 80% of the funds to the states based upon population and 20% based upon specific infrastructure needs (like for airports or bridges, etc.) It would be extremely easy to assure that no real favoritism would come out of the construction package.
4. Perhaps the funniest complaint that I've heard from some Democrats is that infrastructure construction never works to help the economy. This is funny because the whole idea of using infrastructure construction to get the economy moving was begun by Franklin Roosevelt and the Democrats during the Depression of the 1930s. There are countless public buildings and structures that were built for just this reason. The Tennessee Valley Authority and Hoover Dam are examples of major items built in the 1930 for this purpose. Then Obama and the Democrats claimed to be doing the same thing in 2009 (although they didn't actually build much as discussed above.)
The truth is that in a carefully thought-out program of infrastructure construction designed so that the projects would be new ones needed across the nation, Congress could provide a huge boost of the economy that would get us moving back to full employment and prosperity.
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