As a road to a better economy, an old idea gains ground

Building roads, bridges, power plants and other infrastructure builds jobs, pours concrete and makes the economy grow….China is considering a massive infratructure imporvement project right now….


Often dismissed in favor of the quick-jolt stimulus, spending on bridges, streets and sewers is on the table again. Obama backs the public works idea, an echo of the FDR era.
By Richard Simon and Jim Puzzanghera
The Los Angeles Times
November 9, 2008
Reporting from Washington — As recently as a few months ago, the idea of trying to bolster the troubled economy by pumping money into public works projects such as roads and bridges was dismissed as too slow — not the quick pick-me-up that was needed.

But today, economists and policymakers are beginning to change their minds.

Most experts still think infrastructure spending is a slower way to put money in consumers’ hands than simply mailing out government checks the way President Bush did over the summer. What’s changed is that the economic crisis now looks to be so deep and likely to last so long that a stimulus plan that pumps out benefits for months and years seems to fit the situation — with the added bonus of providing long-term benefits to the country.

Skyline Drive and the Shenandoah National Park were built with federal dollars during the Great Depression

“Now we’re in a situation where it looks like we’re going to be in a prolonged downturn, so speed is still relevant, but it’s not the be-all end-all,” said Douglas W. Elmendorf, a former economist for the Federal Reserve Board, the Treasury Department and the Clinton White House.

Elmendorf, now a senior fellow at the Brookings Institution, co-wrote a paper in January arguing against infrastructure spending because it was not fast-acting enough. “The concern at the time was that it would be a very sharp, short drop in economic activity, and we wanted to try to prevent that,” he said recently.

Since then, the situation has changed, Elmendorf said — becoming more dire.

Above: Germany built the “Autobahn” during the depression and before the Hitler era using federal government money to create jobs and infrastructure

Infrastructure spending, which is supported by President-elect Barack Obama, is expected to be a centerpiece of a $60-billion to $100-billion stimulus package Democrats may bring before Congress in a postelection session later this month.

Lawmakers are looking at a wide range of projects, such as building new roads and repairing old ones, improving airports, and constructing schools and sewage treatment plants. They also are considering making funding available to help transit agencies buy buses and rail cars.

The focus will be on job-producing projects that can get underway quickly.

In a new twist, Obama and congressional leaders have talked about ensuring that a good chunk of the infrastructure spending goes to “green jobs,” providing funds for energy-efficiency projects, for example, promoting growth while reducing oil imports and greenhouse gas emissions.

Rep. James L. Oberstar (D-Minn.), chairman of the House Transportation and Infrastructure Committee, traces the history of infrastructure spending as economic stimulus to the massive public works programs launched by President Franklin D. Roosevelt in response to the Depression.

“From the Works Progress Administration of the Great Depression to the Accelerated Public Works Act of 1962 and the Local Public Works Capital Development and Investment Act of 1976, investment in public infrastructure has created and sustained jobs in difficult economic times,” Oberstar said recently, “and it can do so again today.”

China considering 730-bln-dollar transport investment

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