While Amity Shlaes is suggesting a cut in the capital gains tax to spur investment, the nation’s Governors met with Obama yesterday to discuss infrastructure projects. The Washington Post takes a look at some of the complexity in pumping money through the states:
In a recession that lasts only a few months, economists say spending on infrastructure would do little to revive the economy; public works projects typically take years to get underway. Even with projects that are ready to go — meaning they have been designed, engineered and have cleared environmental and other bureaucratic hurdles — only about a quarter of the overall cost is spent within the first year, according to the Transportation Department.
Because this recession is projected to extend well into 2009, many economists see infrastructure spending as a viable way to put people to work and keep money circulating domestically. Unlike tax rebates, which might be spent on foreign goods or used overseas, money for road projects would be used to hire U.S. workers and to purchase domestic gravel and steel.
The need for infrastructure improvements is enormous. Federal transportation officials have estimated that the nation should spend $225 billion a year to modernize and maintain its crumbling roads, bridges and transit systems.
There is one place where Shlaes is right. We don’t need a new New Deal with grandiose projects. We need a practical stimulus package to accomplish infrastructure repairs that were put off during the boom years:
Aides said Obama’s transition team is trying to craft a strategy for prioritizing projects at the national level, relieving state officials of that responsibility. But the best candidates for stimulus spending are likely to be the least glamorous projects, the ones unlikely to thrill members of Congress, several transportation officials said: Bridge repair. Bus purchases. Filling potholes.
“It’s not as if people are going to say: ‘You know what? We got some money. We’re going to go build a bridge.’ For one thing, bridges take 13 years, start to finish,” said Janet Kavinoky, a transportation expert with the U.S. Chamber of Commerce. “The dollars are for real basic work that needs to be done to maintain the system we already have.”
Haste Could Make Waste on Stimulus, States Say
LORI MONTGOMERY and MICHAEL D. SHEAR
Washington Post, December 3, 2008