Roads, Rails And Subways, Please
Rep. Peter DeFazio thinks that Barack Obama's getting some bad advice:
There’s a pretty good consensus among members of the House that it should be more. But the dictate from on high in the negotiations with Obama’s advisers — I don’t think the President is there — I think he’s ill-advised by Larry Summers. Larry Summers hates infrastructure, and some of these other economists — who were very much part of creating the problem. Now they’re gonna solve the problem. And they don’t like infrastructure.
They want to have a consumer-driven recovery. We need an investment- and productivity-driven recovery for this country, a long-term recovery.
It's kind of curious that Obama's public statements and YouTube addresses always speak very highly of infrastructure improvements, but there are substantially less funding toward that in the stimulus that you'd expect if you simply read the public PR instead of the actual bill. Although, there has been a general de-emphasis recently, as energy, health care and education spending take prominence.
The reason you want lots of infrastructure spending in the stimulus is because it can both be spent quickly and leave something behind afterwards. That's true of the health care and energy spending as well, but that's not what infrastructure spending appears to be competing with. It's competing with business tax breaks that do not provide nearly the kind of "bang for your buck" that can multiply the effect of fiscal spending. These Chamber-of-Commerce-friendly provisions being put in the Senate package, for example, are appalling.
The Senate bill includes a pro-business tax provision called bonus depreciation, which would allow companies accelerated write-offs of existing equipment and inventory if they make new purchases.
The Senate version also incorporates a complicated but important provision that the U.S. Chamber of Commerce and other business groups are pushing. This measure, which isn't in the House bill, would allow some companies to reduce taxes if they buy down their debt between late 2008 and 2011. The idea is to encourage companies to lower their debts, a process called de-leveraging, and thus get in better shape for an eventual economic recovery.
"We're very encouraged," said Bruce Josten, the vice president of government affairs for the Chamber of Commerce. "The specific purpose . . . is to create an incentive on a very short-term basis to have an orderly process to de-leverage that debt and strengthen their balance sheets."
The other issue here is that Americans interface with their infrastructure to a far greater degree than any other proposed spending (unless you sit on the Internets all day like me, in which case the broadband spending would apply). Therefore they know intuitively that it's crumbling, and they are desperate to see it fixed, and are even WILLING TO PAY FOR IT. Keep in mind that this passage was written by Frank Luntz.
Consider this: A near unanimous 94% of Americans are concerned about our nation's infrastructure. And this concern cuts across all regions of the country and across urban, suburban and rural communities.
Fully 84% of the public wants more money spent by the federal government -- and 83% wants more spent by state governments -- to improve America's infrastructure. And here's the kicker: 81% of Americans are personally prepared to pay 1% more in taxes for the cause. It's not uncommon for people to say they'd pay more to get more, but when you ask them to respond to a specific amount, support evaporates. (That 74% of normally stingy Republicans are on board for the tax increase is, to me, the most significant finding in the survey.)
This isn't "soft" support for infrastructure either. It stretches from Maine to Montana, from California to Connecticut. Democrats (87%) and Republicans (74%) are prepared to, in Barack Obama's words, put skin in the game, which tells you just how wide and deep the support is.
And Americans understand that infrastructure is not just roads, bridges and rails. In fact, they rated fixing energy facilities as their highest priority. Roads and highways scored second, and clean-water treatment facilities third.
You can see a road or a bridge or a new rail line or a better water treatment plant. You will use it every single day. And so the closest thing to a "bailout for Main Street," to employ that overused phrase, is an investment in immediate and long-term infrastructure spending. That can't all be accomplished by the stimulus, nor should it be - we should work for a long-term funding source through something like a National Infrastructure Bank, and we should try to alter the percentage of mass transit and rail spending in the transportation bill (right now it's 80-20 for roads). But clearly, with all the less targeted and less useful corporate tax breaks in there, infrastructure could be prioritized more.
In my mind, the two things progressives should be fighting for in the recovery bill is increased infrastructure spending at the expense of those corporate tax giveaways, particularly the benefit for lowering debt (which has no short-term benefit to the economy at all), and getting the mortgage cram-down provision into the bill, so bankruptcy judges can lower the amount that people upside down in their homes owe. Let's see how much leverage progressives have.