Saturday, February 7, 2009

It's About the Infrastructure, Stupid

Rachel Maddow once again figures out what the politicians don't seem to understand. The solution to solving the economic crisis is investing in the infrastructure, which is collapsing. Barack needs to read this:

The economy is in crisis because people aren‘t buying enough stuff. There is supply, right? People make stuff that is to be sold and then there‘s demand. Demand is buying.

Right now, there‘s not enough buying. So, what they teach you in the very easiest semester of the very easiest economics class, because it‘s really easy to understand even if you are a total dunderhead about more completed macroeconomics stuff, what they teach is that the government can turn around an economic crisis that‘s caused by not enough demand—by making demand. Stimulating demand, they call it—economic stimulus.

On the continuum between rocket science and duh, understanding the concept of economic stimulus is closer to duh. It is not the most complicated policy idea. If no one else has anything to spend and the economy is collapsing because of it, the government should spend and it should try to spend in a way that gets everybody else spending, too. That‘s the whole kitten caboodle, that‘s the whole idea.

Last night, 90 percent of Senate Republicans voted for something they called an economic stimulus that had zero government spending in it. That‘s like calling a rack of lamb a fruit cocktail. That‘s a big meat tax cut there you, guys. But how about we get back to the idea of economic stimulus, you know, to save ourselves from having to eat cat food while we live in our cars for the rest or our lives?

It is reality check time here. Economic stimulus, most efficiently, is government spending. The most purely stimulative spending would probably be just to give envelopes full of cash to the poorest people in the country. Statistically, they‘d be the most likely to spend it.

In the absence of a political reality, that would make something like that possible, an almost ideal strategy is government spending, say, on infrastructure of which the American Society of Civil Engineers just said we could use $2.2 trillion worth. It‘s good jobs that can‘t be outsourced, immediately, that have the long-term benefit of dragging our country into the 21st century in terms of our ability to compete economically with the rest of the world.

As they said—duh. Not complicated. Ask your friendly neighborhood governors. They will tell you.

Joining us is Democratic Pennsylvania Governor Ed Rendell.

Governor Rendell, thank you very much for joining us tonight.

GOV. ED RENDELL, (D) PENNSYLVANIA: That was brilliant, Rachel.

Here's someone who really knows something about saving an economy and infrastructure:
At the age of 80, you’re about to bring out a new book, “Bold Endeavors: How Our Government Built America and Why It Must Rebuild Now,” an ode to the Erie Canal, the transcontinental railroad and other legends of American infrastructure.
I think this is a very important subject. At the same time, because it’s not Marilyn Monroe with the wind blowing, it’s not so easy to write about.

Until now, infrastructure has not been seen as the sexiest issue.
That’s right, because it’s such a terrible word.

Perhaps we need to revive the term “public works” or come up with a new coinage.
I’ve tried. I thought of calling my book “Rebuilding America.” That is kind of yuck.

You could also use a better name for the National Infrastructure Bank, which you’re trying to create, and which is not a bank.
I’ll be speaking about that on Feb. 22, at the National Governors Association conference in Washington.

We should point out that you’re the investment banker credited with solving New York’s fiscal woes in 1975 and saving the city from bankruptcy.
The New York City crisis was less dangerous than the current situation. Maybe for the first time in history, the U.S. is faced with doubts about its destiny. In less than 50 years, we have gone from the American Century to the American Crisis.

What do you make of President Obama’s $800-billion-plus stimulus package?
I totally support Obama, but I would argue in favor of a greater amount of infrastructure investment and probably fewer tax cuts. There should be less concern about rapid liquidation and greater emphasis on long-term investments.

The emphasis now seems to be on shoring up levees and making repairs to crumbling structures instead of building new ones.
Repairs are very important, as is new construction, and there should be a mix of both. If we have a major nuclear program in the next 25 years, for instance, then we have to do something about the infrastructure that goes with that, from creating an energy grid to dealing with nuclear-waste disposal.

This economist makes the case for a separate infrastructure spending package apart from the current bailout plan:
PRESIDENT OBAMA is the first urbanite in the White House since Teddy Roosevelt. He certainly knows the vital role that cities play in America. Yet despite the Chicagoan on Pennsylvania Avenue, infrastructure spending in the House stimulus bill follows a business-as-usual pattern that discriminates against density. The only way to break that pattern is to take non-repair-related infrastructure spending out of the stimulus, and craft a separate bill that looks beyond the current recession. Major infrastructure projects, especially in cities, cannot be done quickly.

Per capita transportation spending in the House stimulus package, including transit, is more than 50 percent higher in the 10 least dense states than in the 10 densest states, including Massachusetts. Yet America's highways and rails already make it easy to move goods and people across America's open spaces. The hard slog is getting across dense downtowns. Other elements in the stimulus package also favor farm over city. The subsidies for broadband infrastructure are unnecessary in already-connected cities. Access to the latest technologies is, after all, one reason for cities' economic success. The $6 billion for weatherizing homes will surely do more for rural America than for apartment dwellers. There is urban spending in the bill, but money spent rehabilitating public housing is not the transformative investment that will make cities more productive.

Infrastructure is the skeleton on which the economy hangs. In the 19th century, America built a great transportation network of rails and canals that enabled the wealth of the land to make its way east. America's 19th-century cities - Chicago, Detroit, Pittsburgh - were nodes on that network that grew along with it. In the 20th century, Americans built a highway system that decentralized urban areas. Brown economist Nathaniel Baum-Snow documents that with each extra interstate highway ray, cutting from suburb to city, central city population declined by about 10 percent relative to its suburbs. That suburban exodus reminds us that infrastructure can have far-reaching consequences. Serious, time-consuming planning is needed to make sure that adverse consequences are anticipated and minimized.

A visionary infrastructure strategy cannot fit into a stimulus package. For stimulus, speed is vital. The Big Dig took 21 years. Working in cities is particularly slow because it takes time to tunnel, and because community opposition holds up urban mega-projects. A need for speed will always create an anti-urban bias.

America needs both a stimulus package and new infrastructure, but combining the two in one bill is a mistake. Congress should eliminate any pretense that the stimulus plan is addressing long-run infrastructure needs, and leave in only those infrastructure expenditures, like rehabilitating decaying roads and bridges, that require minimal planning, public approval, and time to implement.

A separate infrastructure bill would take cost-benefit analysis seriously, and direct spending to the projects with the highest returns. This means breaking the infrastructure spending status quo. As the Office of Management and Budget's website notes, highway infrastructure "funding is not based on need or performance and has been heavily earmarked." To reduce boondoggle projects, localities, particularly wealthier ones, should provide a significant share of the funding. Requiring locales to pony up their own cash helps ensure that new projects are really valued.

The role of cities is vital. According to County Business Patterns, 56 percent of America's wages are earned in the 22 mega-metropolitan areas with more than 2 million people each. A serious infrastructure bill would aid metropolitan areas, but ask for sacrifice in return for subsidy.

Local opposition has the ability to make projects slower, more expensive, and far less efficient. The train ride to New York would be much quicker if Connecticut had allowed the Acela line to run straight. Federal aid needs to be made contingent on efficient routes and limited cost overruns.

The cities that stand at the center of the economy need new infrastructure, but that can't be built in two years. To ensure an infrastructure plan that does not shortchange metropolitan America, major infrastructure needs to come out of the stimulus package and get a bill of its own.

But we've known for years about the infrastructure neglect but this criminally inept government has chosen to ignore the issue; just as they've ignored all the threats to our nation. Now it could be too late.
America's infrastructure is full of cracks, leaks and holes and is getting worse, according to an analysis by civil engineers that concludes the nation's transportation, water and energy systems have shown little improvement since they were given an overall grade of D-plus in 2001.

A report by the American Society of Civil Engineers released Thursday assessed trends over the last two years in the condition of 12 categories of infrastructure, including roadways, bridges, drinking water and energy.

The report blamed the deteriorating infrastructure on a weak economy, limited federal programs, population growth and the threat of terrorism, which diverted money to security.

"Americans' concerns about security threats are real, but so are the threats posed by crumbling infrastructure," Thomas Jackson, ASCE president, said in a statement. "It doesn't matter if the dam fails because cracks have never been repaired or if it fails at the hands of a terrorist. The towns below the dam will still be devastated."

There was no progress for schools, which received the worst grade — D-minus — from the engineers in 2001. The report said three out of four school buildings are inadequate. They estimate it will cost more than $127 billion to build new classrooms and modernize outdated schools.

Energy transmission earned a D-plus two years ago, and the engineers said the trend is getting worse. Investment in transmission fell by $115 million annually, to $2 billion a year in 2000 from $5 billion in 1975. Actual capacity increased by only 7,000 megawatts a year, 30% less than needed to keep up with power demand.

Roads didn't fare much better. "The nation is failing to even maintain the substandard conditions we currently have," the report said, adding that the average rush hour grew by more than 18 minutes between 1997 and 2000.

The engineers' report also saw no improvement on bridges, noting that 27.5% of U.S. bridges were structurally deficient or obsolete in 2000.

Transportation systems showed signs of decline, despite increased spending over the past six years. "Efforts to maintain the systems are outpaced by growth in ridership," the report said.