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