Chris Berry On The Net

As the Obama administration prepares to take office, Democrats on Capital Hill are scrambling to piece together a so-called economic stimulus package with a price tag that could top $700 billion. The centerpiece of this package would be a massive New Deal style program of public infrastructure spending. The fact that this same type of spending program produced no meaningful stimulus during the Great Depression is apparently of no concern to the lawmakers who are determined to repeat history.

Mr. Obama tells us that he has instructed his economic advisors to craft a plan that will create 2.5 million new jobs by January of 2011. How he plans to do this remains unclear. Since the president lacks the power to simply create jobs out of thin air, a healthy dose of skepticism is in order. If we pause to do the math, our skepticism should be replaced by alarm and outright anger. $700 Billion divided by 2.5 million jobs equals a cost to the taxpayers of $280,000 per job “created” under this plan.

As unsavory as this all sounds, if our only choice is between bailing out failed companies or repairing our crumbling roads and bridges, the decision is a no-brainer. When our grandchildren are presented with the bill, they will at least have some tangible evidence that we didn’t simply flush their money down a rat hole. In terms of providing an immediate stimulus to the economy, however, this plan cannot possibly succeed. It didn’t work during the 1930’s and it won’t work now.

The major problem with large scale public infrastructure spending is that it typically takes years to get a project off the ground. If Congress appropriated $700 billion on Mr. Obama’s first day in office, much of it would remain unspent on his last day. Most of the time that goes into major public works projects is spent during the planning stages. There simply isn’t a massive backlog of projects that we can start building tomorrow.

In order to get a major road building project under way, there are countless political and bureaucratic hurdles that must be cleared before the first shovel is turned. A spending bill of this magnitude will undoubtedly set off the greatest feeding frenzy in political history as every member of Congress fights to bring home his or her share of the pork. In the end, much of the potential economic benefit of the program will be lost as the money is divvied up by congressional districts rather than being directed to projects with the greatest stimulative potential. The “Bridge to Nowhere” will look like a perfectly reasonable project compared to what we will see if this plan becomes a reality.

After Congress destroys any hope that the plan can produce a meaningful economic stimulus, the real work can begin. Depending on the size and scope of the various projects, this can mean months or years of design and engineering studies, followed by endless legal battles over right of way acquisition, environmental impacts, and good old fashioned NIMBYism. When the legal hurdles are cleared, soliciting bids can take months, and then the losing bidders can challenge the results. By the time the final obstacle is out of the way, the price tag for the project will have increased substantially, leading to further delays. This process might keep a lot of engineers and lawyers busy, but it will take years before any actual construction work begins.

Even though the Bush administration has already thrown trillions of taxpayer dollars at the financial crisis with no quantifiable results, political expediency will require Mr. Obama to do the same as soon as he takes office. In order to deliver on his promise of change, he will probably be forced to abandon the present course of action long before the impact can be determined. In the end, the taxpayers will be left holding the bag for the failed policies of two administrations, but at least we will get some badly needed infrastructure improvements from one of them.