5 Myths Behind Obama's Infrastructure Spending Push
Shortly after the $830 billion stimulus bill was enacted in 2009, President Obama boasted that it included the "largest new investment since President Eisenhower built the Interstate Highway System," and said it would "help states create a 21st century infrastructure" and "fuel growth in an industry that's been hard hit."
Now, nearly 2 1/2 years later, Obama wants another $50 billion as part of his American Jobs Act to create jobs and fix "our crumbling infrastructure." But he still seems to buy into several myths about the nation's infrastructure.
• Infrastructure spending is declining: "We have deferred tough decisions," the president said last fall, and "our shortsightedness has come due."
But inflation-adjusted infrastructure spending climbed 23% from 1990 to 2007, according to the Congressional Budget Office. Federal, state and local governments spend a combined total of more than $356 billion a year. It was 2.4% of GDP in 2007, not far from the 3% in 1960, when the U.S. was first building the interstate highway system.
To be sure, groups such as the American Society of Civil Engineers have consistently urged greater spending to improve deficient or obsolete roads, bridges and water supply systems.
• Our infrastructure is falling apart: Touting the new jobs bill, Obama complained about "our crumbling roads and our crumbling bridges." This alarm has been sounded for decades.
In 1988, a Federal Highway Administration official said America faced a looming "bridge crisis." In 1993, President Clinton pushed in vain for $100 billion more infrastructure spending to avoid a "crisis." A 2005 USA Today headline screamed: "Report: Nation's in frastructure crumbling." In 2009, the New York Times reported that "U.S. infrastructure is in dire straits." But the dire warnings never seemed to come true.
"It is crumbling somewhere, but not everywhere," said Samuel Staley, a Reason Foundation transportation expert and associate director at Florida State University's DeVoe Moore Center. "Some states have done really well with their transportation money."
• We're falling behind China: Obama told Congress that we shouldn't "sit back and watch China build newer airports and faster railroads."
Others say the comparison isn't apt, because countries like China and India are pretty much just getting started. Despite all the money they're spending, these countries have horrific traffic problems. Beijing scored 99 out of 100 in IBM's "commuter pain" index; New Delhi scored 81. Far down on the list is Los Angeles at 25 and New York at 19.
• More federal money means more jobs: Obama claimed in 2009 that the stimulus would "create or save" 400,000 construction jobs. But a study by economists Timothy Conley and Bill Dupor found that "the number of highway, bridge and street construction workers, nationwide, fell dramatically," despite the huge infusion of federal money.
Conley and Dupor, as well as Stanford economist John Taylor, found many states simply shifted money after getting the stimulus funds, but didn't increase infrastructure spending.
And in a new Mercatus Center paper, Veronique de Rugy and Matthew Mitchell conclude that " this type of spending typically suffers from massive cost overruns, waste, fraud and abuse. This makes it a particularly bad vehicle for stimulus."
• The money can be spent fast: In its jobs plan, the White House calls for $50 billion in "immediate" transportation projects.
But the original stimulus directed its $62 billion at "shovel ready" infrastructure projects, only to have Obama admit last October that "there is no such thing as shovel-ready projects."
The White House claims new processes will speed the work. Still, its new bill only requires that half the infrastructure money be spent in the first year.
Others note that money isn't infrastructure's only problem.
"Not only are we spending too little right now, but we're also not spending it wisely," the Brookings Institution's Robert Puentes recently wrote. "The nation lacks a clear-cut vision for transportation, and no way to target spend ing to make sure all those billions of dollars help achieve our economic and environmental goals."
http://www.investors.com/NewsAndAnalysis/Article.aspx?id=584886&p=2
Now, nearly 2 1/2 years later, Obama wants another $50 billion as part of his American Jobs Act to create jobs and fix "our crumbling infrastructure." But he still seems to buy into several myths about the nation's infrastructure.
• Infrastructure spending is declining: "We have deferred tough decisions," the president said last fall, and "our shortsightedness has come due."
But inflation-adjusted infrastructure spending climbed 23% from 1990 to 2007, according to the Congressional Budget Office. Federal, state and local governments spend a combined total of more than $356 billion a year. It was 2.4% of GDP in 2007, not far from the 3% in 1960, when the U.S. was first building the interstate highway system.
To be sure, groups such as the American Society of Civil Engineers have consistently urged greater spending to improve deficient or obsolete roads, bridges and water supply systems.
• Our infrastructure is falling apart: Touting the new jobs bill, Obama complained about "our crumbling roads and our crumbling bridges." This alarm has been sounded for decades.
In 1988, a Federal Highway Administration official said America faced a looming "bridge crisis." In 1993, President Clinton pushed in vain for $100 billion more infrastructure spending to avoid a "crisis." A 2005 USA Today headline screamed: "Report: Nation's in frastructure crumbling." In 2009, the New York Times reported that "U.S. infrastructure is in dire straits." But the dire warnings never seemed to come true.
"It is crumbling somewhere, but not everywhere," said Samuel Staley, a Reason Foundation transportation expert and associate director at Florida State University's DeVoe Moore Center. "Some states have done really well with their transportation money."
• We're falling behind China: Obama told Congress that we shouldn't "sit back and watch China build newer airports and faster railroads."
Others say the comparison isn't apt, because countries like China and India are pretty much just getting started. Despite all the money they're spending, these countries have horrific traffic problems. Beijing scored 99 out of 100 in IBM's "commuter pain" index; New Delhi scored 81. Far down on the list is Los Angeles at 25 and New York at 19.
• More federal money means more jobs: Obama claimed in 2009 that the stimulus would "create or save" 400,000 construction jobs. But a study by economists Timothy Conley and Bill Dupor found that "the number of highway, bridge and street construction workers, nationwide, fell dramatically," despite the huge infusion of federal money.
Conley and Dupor, as well as Stanford economist John Taylor, found many states simply shifted money after getting the stimulus funds, but didn't increase infrastructure spending.
And in a new Mercatus Center paper, Veronique de Rugy and Matthew Mitchell conclude that " this type of spending typically suffers from massive cost overruns, waste, fraud and abuse. This makes it a particularly bad vehicle for stimulus."
• The money can be spent fast: In its jobs plan, the White House calls for $50 billion in "immediate" transportation projects.
But the original stimulus directed its $62 billion at "shovel ready" infrastructure projects, only to have Obama admit last October that "there is no such thing as shovel-ready projects."
The White House claims new processes will speed the work. Still, its new bill only requires that half the infrastructure money be spent in the first year.
Others note that money isn't infrastructure's only problem.
"Not only are we spending too little right now, but we're also not spending it wisely," the Brookings Institution's Robert Puentes recently wrote. "The nation lacks a clear-cut vision for transportation, and no way to target spend ing to make sure all those billions of dollars help achieve our economic and environmental goals."
http://www.investors.com/NewsAndAnalysis/Article.aspx?id=584886&p=2
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