February 17, 2008

A *REAL* economic stimulus package

So Congress, worried about the economy, passes a $168 billion "economic stimulus package" that the President signs, giving tax breaks to businesses and rebates to taxpayers in an effort to stimulate spending and conversely the now-faltering economy.

Perhaps if Congress had done their homework, they'd have realized that there are far better areas they could have put that money that would do much more to jump-start the economy. With history to back it up.

Tax breaks to some businesses, especially small businesses (which are the lifeblood of the economy to begin with) may be beneficial. And while every taxpayer enjoys getting money back from the government, polls are already showing that a vast majority will be using the rebates to pay down debt or put into savings, instead of spending it as Congress intended. Sorry, Congress/Mr. President, but a much better location to target that $168 billion would have been infrastructure.

Take a look around you. Our public infrastructure is crumbling. Electric grids are overloaded. Water and sewage facilities are old and in need of replacement, as is thousands upon thousands of bridges and miles of pavement. People are sitting in traffic congestion due to lack of capacity and lack of other options.

Even using just 1/3 of that $168 billion figure for infrastructure would have given astounding results. History has long shown that investment in public infrastructure pays hefty dividends down the road (pun intended). Not only would it create construction jobs (with several ancillary economic benefits as a result), but investing in the transportation infrastructure would give motorists and travelers time and money benefits....less time on the road (meaning more time with family), less gas wasted (meaning less money spent on gas...money that they can then spend elsewhere), and better ability to move goods and services (meaning money savings for businesses).

It's a win-win situation. And it's completely UNSAT that Congress failed to consider it.

3 comments:

Alex said...

Froggie, I agree, but I think you miss the point about what the stimulus package was supposed to be (regardless of how effective or ineffective it will be). The whole thing is supposed to be quick, and no matter how good of an investment infrastructure is, it's not a quick way to get money into the economy. In fact, one of the biggest problems is how long it takes federal projects to get rolling - the delays are horrendous, you have to do all of these studies, and it simply takes too long.

Froggie said...

Not necessarily true. There are several projects across the country that have had their studies completed and approved, and are only waiting for money to begin construction.

Nevermind that we have a huge maintenance backlog due to both stagnant revenue and inflation. And maintenance can be done a lot more quickly than a typical project.

Alex said...

Even if the projects are ready to go, the whole reasoning behind these stimuli is to be quick, focused, and temporary. Our needs for infrastructure are long term, broad based, and rather permanent.

That's the reason why they wanted to focus the stimulus on poorer members of society, because they'd be more likely to spend it right away. Getting that money into the economy immediately is the goal - infrastructure is too long term when you're trying to head off a recession.

The whole concept is dubious, of course, which makes pleas for rational spending even more unlikely to be answered.