September 9, 2010
You don’t have to look very far to find a rabid, hostile reaction to President Obama’s proposed $50 billion transportation infrastructure program. After all – it’s an election year. I was quite surprised when I read this paragraph from a BusinessWeek report about the proposal:
For companies that do the unglamorous work of pouring cement, crushing stones, and hauling earth, President Barack Obama’s $50 billion proposal outlined on Sept. 6 to rebuild U.S. roads, railways, and runways is welcome relief amid unrelenting economic gloom. If approved by Congress (an uncertain proposition in an election year) Obama’s plan would pick up the slack when most of the highway stimulus funds under the $814 billion American Recovery and Reinvestment Act is expected to be spent next year, says Mike Betts, an analyst with London-based Jefferies.
Stop and think about that for a moment. The phrase I wish to bring to your attention is:
. . . most of the highway stimulus funds under the $814 billion American Recovery and Reinvestment Act is expected to be spent next year . . .
The first question that came to mind was: Why the hell wasn’t it spent last year? We’ve been reading about how the effects of the “Obama stimulus bill” (a/k/a the American Recovery and Reinvestment Act) have already stopped boosting the economy. How much more of that money has been sitting on the sidelines? Beyond that, why didn’t the American Recovery and Reinvestment Act provide more funding for infrastructure?
The proposed transportation infrastructure program will cost approximately the same as the B-2 Stealth Bomber program, which produced 21 bombers at an average cost of $2.1 billion per aircraft in 1997 dollars.
Since July of last year, I have been among those arguing that the $787 billion economic stimulus package was inadequate, after reading about a Bloomberg survey of economists, which supported that conclusion in February of 2009. In early 2009, there was a greater sense of urgency about the state of the economy and a stronger political will to enact a more significant stimulus. Unfortunately, President Obama was not up to the task of pushing a larger bill through. As a result, the President is now making piecemeal stimulus efforts, such as the $50-billion infrastructure proposal. The tragedy of not getting it right the first time seemed more unfortunate after I read a recent posting by Barry Ritholtz at his blog, The Big Picture. Here is what Mr. Ritholtz had to say:
Yesterday on XM Sirius, we discussed Infrastructure.
One of the callers was a civil engineer who suggested we take a look at the US Infrastructure Report Card (infrastructurereportcard.org), which grades the US on a variety of factors. The 2009 Grades include: Aviation (D), Bridges (C), Dams (D), Drinking Water (D-), Energy (D+), Hazardous Waste (D), Inland Waterways (D-), Levees (D-), Public Parks and Recreation (C-), Rail (C-), Roads(D-), Schools (D), Solid Waste (C+), Transit (D), and Wastewater (D-).
Overall, America’s Infrastructure GPA was graded a “D.” To get to an “A” requires a 5 year infrastructure investment of $2.2 Trillion dollars. Hence, you can understand if I am underwhelmed by the latest $50B proposal.
Each individual state is also graded; NY’s is after the jump.
After reading about the Infrastructure Report Card, I couldn’t help but wonder how our economy would have benefited from a $2.2 trillion infrastructure program rather than the $850 billion stimulus program enacted in 2009. Consider what economist Joseph Stiglitz had to say about how the global financial crisis was affecting Australia in August of 2010:
Kevin Rudd, who was prime minister when the crisis struck, put in place one of the best-designed Keynesian stimulus packages of any country in the world. He realized that it was important to act early, with money that would be spent quickly, but that there was a risk that the crisis would not be over soon. So the first part of the stimulus was cash grants, followed by investments, which would take longer to put into place.
Rudd’s stimulus worked: Australia had the shortest and shallowest of recessions of the advanced industrial countries.
There’s a right way of doing economic stimulus and a wrong way of implementing such a program. Unfortunately, America did it the wrong way.
Voters Got Fooled Again
September 13, 2010
With mid-term elections approaching, the articles are turning up all over the place. Newsweek’s Howard Fineman calls them pre-mortems: advance analyses of why the Democrats will lose power in November. Some of us saw the handwriting on the wall quite a while ago. Before President Obama had completed his first year in office, it was becoming clear that his campaign theme of “hope” and “change” was just a ruse to con the electorate. On September 21, 2009, I wrote a piece entitled, “The Broken Promise”, based on this theme:
In November of 2009, Matt Taibbi wrote an article for Rolling Stone entitled,“Obama’s Big Sellout”. Taibbi’s essay inspired Edward Harrison of Credit Writedowns to write his own critique of Obama’s first eleven months in office. Beyond that, Mr. Harrison’s assessment of the fate of proposed financial reform legislation turned out to be prescient. Remember – Ed Harrison wrote this on December 11, 2009:
Mr. Harrison’s point about those incumbencies is now being echoed by many commentators – most frequently to point out that Janet Napolitano was replaced as Governor of Arizona by Jan Brewer. Brewer is expected to win in November despite her inability to debate or form a coherent sentence before a live audience.
Bob Herbert of The New York Times recently wrote a great piece, in which he blasted the Democrats for failing to “respond adequately to their constituents’ most dire needs”:
I was surprised to see that Howard Fineman focused his campaign pre-mortem on President Obama himself, rather than critiquing the Democratic Party as a whole. At a time when mainstream media pundits are frequently criticized for going soft on those in power in order to retain “access”, it was refreshing to see Fineman point out some of Obama’s leadership flaws:
Well, people aren’t on board and that’s the problem. The voters were taken for chumps and they were fooled by some good campaign propaganda. Nevertheless, as President George W. Bush once said:
At this point, it does not appear as though the voters who supported President Obama and company in 2008 are willing to let themselves get fooled again. At least the Republicans admit that their primary mission is to make life easier for rich people at everyone else’s expense. The fact that the voters hate being lied to – more than anything else – may be the one lesson the Democrats learn from this election cycle.
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