The key feature in President-elect Barack Obama's proposed infrastructure spending program? Construction and renovation projects must be initiated now, and in the immediate months ahead, in order to provide as much stimulus to the U.S. economy when it's needed: which is right now. (The use-it-or-lose-it requirement: programs must be 'shovel-ready.')
GDP-increasing investments
Another dimension of the program, which until now has not received as much news coverage as it should have, in economist David H. Wang's interpretation: upgrades to systems (schools, electric grid, energy, Internet) that will help make the United States more competitive in the global economy.
"School modernization will be a major, low-profile, value adder. Full, modern schools, all with full science labs, full libraries, massive broadband access will amplify learning and knowledge, particularly in poorer school districts," Wang said. "Education investment is strongly correlated with increases in both GDP and employee productivity."
President-elect Obama said his administration will make the single, largest, new investment in the nation's infrastructure since the creation of the interstate highway system in the 1950s under President Dwight D. Eisenhower, The New York Times reported. Governors told Obama they have $136 billion in road, bridge, water, and related projects ready to go; local regional transmit systems have $8 billion in projects that could begin immediately.
Some economic conservatives and market absolutists will offer a critique, concerning the rising budget deficit, but Wang said these arguments are not only self-defeating, "they border on the absurd."
"The issue is maintaining the U.S. economy. In a year or two if we have a functioning economy in conjunction with a large budget deficit, we will be fortunate," Wang said. "The macroeconomically correct policy is massive fiscal stimulus in 2009 and 2010. It will help jump-start U.S. GDP."
Economic Analysis: The United States has no other choice: fail to invest, and the recession worsens. Invest now, and the U.S. plants the seeds of recovery. Word has it that Exxon-Mobil (NYSE: XOM) is not likely to invest in modernizing public schools, hospitals, roads, bridges, highways, dams, the electric grid, and water/sewer systems. And the money is not coming from the Bank of France, either. (France has its own recession to deal with.)
Closing Bell: When We All Love the PIIGS (NBG, SQNM, PG, ERTS, KO)
Serious Money: Cheapest Stocks List Shrinks from 26 to 21
Chasing Value: Hasbro Earnings Makes My Point
Reader Comments (Page 1 of 1)
12-08-2008 @ 3:33PM
nancy said...
where is the border wall(already funded but not built) and port security? They are the very definition of "infrastructure" yet neither bush nor obama want them? explain please. they would create jobs and could be in conjuntion with schools,bridges and roads.which we already have but need maintanence.
12-08-2008 @ 6:38PM
winslow said...
Instead of rebuilding roads,bridges, and highways, we need to look ahead into the future and start to move away from auto transportation and emphasize high-speed rail between major cities. This is where infrastructure for the new century is needed.
High-speed rail line terminals, where Smart Cars can be cheaply rented on a daily basis, will be the new,modern transportation between cities. Eventually cities can gear-up to provide rail in the entire city.
12-08-2008 @ 4:31PM
Mike said...
There are really only two ways the government can directly contribute to the markets; tax breaks and spending (which are effectively the same thing.) Considering our government's debt, I'm not so sure we can afford either without printing money...
12-08-2008 @ 4:43PM
Iridium said...
If you've never done so take a drive to East Cleveland. That will show you exactly what this economic stimulus package will bring you.
More federal money has been thrown at East Cleveland than any other place in the United States per capita. Has it made any difference, nope.
They spend more money per student than nearly any other school in the nation. They even built brand new buildings. Some of which were torn down after completion.
East Cleveland has one of the most corrupt school boards in the nation that steals million of tax dollars to enrich the members of the board.
This is who will get the stimulus package. The people that got Obama elected. He must provide them with money and welfare or he will have to resign a year into office.
How are you going to increase GDP by using federal dollars to do so. The definition of a program would mean the reduction of net profit to individuals to fund the federal programs.
This package is going to cost hundreds of billions in wages alone. Or is Obama going to just give out money to contractors. Create a Big Dig on the national scale. Every contractor and developer in the nation is going to come screaming for this free money. We'll get roads and bridges made out of paper. The school buildings will start falling down three years after they are built.
The mafia is going to go nuts. They'll profit more from this than they ever did during prohibition.
Hey Obama, grow a brain. Take the federal government out of the equation. Cut taxes by 75%. End welfare now. Give generous subsidies to small business. For god's sake close the damn border.
I know all too well that you will draw millions of illegal workers into the country and then get an amnesty bill passed so they become American citizens to work on your greatest welfare project in the history of man. I know who you are. You are a garbage man. A welfare monger. A ponzi schemer.