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December 30, 2008

Spend, Baby, Spend

Dave Roberts at Grist flags this Bloomberg article on the Obama stimulus with some concern. Turns out that when you throw infrastructure money at states with a "use it or lose it" clause, they end up wanting to spend it on roads:
Missouri's plan to spend $750 million in federal money on highways and nothing on mass transit in St. Louis doesn't square with President-elect Barack Obama's vision for a revolutionary re-engineering of the nation's infrastructure.

Utah would pour 87 percent of the funds it may receive in a new economic stimulus bill into new road capacity. Arizona would spend $869 million of its $1.2 billion wish list on highways.

There's a legitimate conflict here, of course. If the point is to get money into the economy, it needs to happen fast. Since many states have de-prioritized mass transit during the Lost Years (if it ever was a priority in places like Utah), there are far fewer such projects "ready to go." Keynes once opined that during a depression government funding for "digging holes in the ground" would be worthwhile even if they were to be filled right back up again. In fact, given our warming world, empty holes would likely be better in the long run than building more capacity into highway systems that don't need it or encouraging sprawl when smart development is the way to go.

This will be hard nut to crack, though. Dave Roberts calls it a "missed opportunity" if we just end up building roads. But I don't think that properly acknowledges the sizable, ahem, roadblocks in the way of reorienting infrastructure spending. At the state and federal levels, there are powerful interests intent on keeping the road money flowing and, with the recession gaining speed, any worker getting an honest paycheck is looked on as a blessing. The fact is our current system is fundamentally designed to build roads and bridges at the expense of just about everything else. Which is why Obama during the campaign supported a National Infrastructure Bank that included a panel of experts to determine spending priorities.

It will thus be interesting to see how Obama squares his support for such an entity vs. the dambusting flood of road pork that his stimulus plan threatens to unleash. We haven't really heard anything yet on how the money might be structured - it's possible that Obama may yet use it as an opportunity to establish an infrastructure bank of some kind, even if some money is released upfront to allow states a head start on the projects that really are ready to go (as opposed to those that are on the wishlist). And we're not just whistling into the wind on this one. In Obama's Meet the Press appearance a few weeks ago, he acknowledged that states will want to get going on their "shovel-ready" projects but first:

...We're going to have to prioritize it and do it not in the old traditional "politics first" wave. What we need to do is examine what are the projects where we're going to get the most bang for the buck, how are we going to make sure taxpayers are protected. You know, the days of just pork coming out of Congress as a strategy, those days are over.
At the end of the day, it's hard to believe that Obama will give states a blank check. The true missed opportunity, in my view, will not be over which transit projects go unbuilt but rather over the chance to remake the pork-barrel infrastructure spending system that got us in this crazy wishlist business in the first place.

Photo by Beige Alert used under CC license

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