Opinion: Stimulus has to include more than money for building November 24, 2008 By Richard G. Little, in The Mercury News (MercuryNews.com) In the face of the near universal calls for increased infrastructure spending as a way out of our deepening economic gloom and rapidly growing unemployment, we ought to take a deep breath and think a little bit about what that entails.
Investing in infrastructure now is a great idea. Much of what we've built since the end of World War II is in deplorable condition and needs extensive renovation or replacement. The current slowdown is a good time to start addressing decades of neglect.
With the housing industry at a standstill and the rest of the private sector hunkered down, federal spending for useful things we need anyway is not a bad idea. It certainly has more political appeal than bailing out the denizens of Wall Street.
However, all the talk about the New Deal doesn't appear to recognize that the facts on the ground today are clearly different from what they were 75 years ago, and this calls for a more nuanced strategy. It's not that the situation doesn't demand action; it's just that we ought to make sure that all this new spending has the desired effect.
For example, in the rush to get people working, has anyone noticed that we don't have nearly enough people trained in the skilled crafts that modern infrastructure projects require? These aren't pick and shovel Depression jobs; we need a lot more electricians, steamfitters, welders, and heavy equipment operators, to name but a few. A stimulus package with real sticking power should support training in the construction trades for the vast number of young and underemployed people for whom college is not the career solution.
A bonus is that well-paying construction jobs can't be outsourced because construction, like politics, is local. At the same time, we need to be careful that we don't pump money into the economy so fast that California just ends up competing with its neighbors for labor and materials, driving up prices everywhere.
We also need to ensure that only projects that meet reasonable economic, environmental, and social performance criteria get built. "Bridges to Nowhere" may stimulate local economies, but if that's all they do, perhaps the locals should fund them.
We need to demand results and accountability. As a case in point, at a recent Keston Institute forum on the $42 billion in infrastructure bonds approved by California voters in 2006, we learned that only 10 percent of the bonds have been spent. State officials cited many causes of delay and noted that many projects will not be under way for years. If we can't figure out how to spend our own money more effectively, how will billions more federal dollars help?
Finally, we need to be more creative with how we fund and finance all this work. California, like all the states, must realize that the old "rich uncle" federal funding model is not sustainable. As an alternative, the blurring lines between the public and private sectors that have emerged during the ongoing financial crisis provide an opportunity to reenvision the federal role in infrastructure investment.
For example, we should be thinking about how a U.S. infrastructure bank could safely invest private pension and social security trust funds in revenuebacked U.S. infrastructure projects. They would not only generate economic and employment benefits today but provide real financial returns for U.S. retirees tomorrow.
This may be our last, best chance for infrastructure investment to bring about real economic change. Instead of just calling for a new deal, it's time to change the game.
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Richard G. Little is director of the Keston Institute for Public Finance and Infrastructure Policy at the University of Southern California and a member of the National Academy of Construction.
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