The New Obama Stimulus Package And The Future Of The Middle Class

The President said in Milwaukee today that he wants to create jobs for Americans.  Mr. Obama stressed that America needs a strong middle class and that American workers, who are the best in the world, could increase the national GDP through their efforts.

Over the next six years we are going to rebuild 150,000 miles of our roads -– that’s enough to circle the world six times.  That’s a lot of road.  We’re going to lay and maintain 4,000 miles of our railways –- enough to stretch coast to coast. We’re going to restore 150 miles of runways.

He adds:

This is a plan that will be fully paid for.  It will not add to the deficit over time -– we’re going to work with Congress to see to that.  We want to set up an infrastructure bank to leverage federal dollars and focus on the smartest investments.  We’re going to continue our strategy to build a national high-speed rail network that reduces congestion and travel times and reduces harmful emissions.  We want to cut waste and bureaucracy and consolidate and collapse more than 100 different programs that too often duplicate each other.

The plan, of course, is not paid any more than any other federal government plan which does not have direct revenue or savings attached to it. The leap that budget experts have to make is that the cost of a mile of repaired road somehow yields a mile of a new road’s worth of revenue. That is a trick that no other Administration has been able to perform. The return on improved infrastructure may exist, but it cannot be calculated car-by-car, train-by-train, or airplane-by-airplane.

The infrastructure dollars that were in the first $787 billion stimulus package are among the last to be spent. It is difficult to create plans and coordinate workers and logistics to build a new electrical grid or thousands of miles of new broadband wires. The investment that the President proposed  will suffer from the same tardy rate of progress. It is not easier to plan and start building a road than it is to build an electrical tower. Each can take months and perhaps longer.

Many companies are reluctant to add new workers because they are afraid of a new recession. They believe that they can use temporary workers or longer hours worked by current employees to allow them to bring in whatever sales they can. If these companies can borrow, interest rates are at lows which have not been available for years. That does not mean that banks will take the risk of lending money to businesses which are small or new. Many financial firms already have large sums of commercial and residential mortgages and troubled business loans on their books.

It is hardly worth the effort to point out that the eight million people who lost jobs since the beginning of the recession are in many cases still looking for work and that the number of people unemployed for 26-weeks or longer is still growing. The President can help improve the joblessness problem, but Washington will have to get the money directly to companies during the balance of the year or the economy will enter another recession next year. The only thing another federal investment in infrastructure will do is allow a population, taxed at unprecedented levels to cover future budget deficits, to drive on perfect roads a decade from now.

Douglas A. McIntyre