Shovel-Ready Isn't Enough
In the transition report on job creation and the economic recovery package, Christina Romer and Jared Bernstein admit that tax cuts are ineffective relative to public spending relative to jobs, but that there aren't enough "shovel-ready" projects out there to provide immediate stimulus, so tax cuts are a good alternative because they can be delivered quickly and efficiently. I'm not sure that's entirely true, and it's based upon what you consider "shovel-ready." Urban planning on infrastructure still requires jobs, after all. And there is an urgent need to think big and invest in industries which will have a long-term impact on productivity and future job creation, particularly by reviving America's manufacturing base. This John Judis opinion piece is really good.
One area that is ripe for such investment--and that is not, from what I have seen, a declared priority of the Obama administration--is high-speed rail. Amtrak's Acela trains--the closest thing we have to one--average less than 100 mph between Washington D.C. and Boston, whereas trains in Western Europe and Japan go more than twice as fast. Many of them also run on electricity. They would be the most energy-efficient and quickest means of getting between places like Boston and New York, or Los Angeles and San Francisco. But they would require a massive investment. For instance, installing high-speed rail in the Northeast corridor could cost about $32 billion, while California's high-speed rail system would require up to $40 billion. A system that would address the other areas of the country could easily raise the cost to the hundreds of billions. The House transportation and infrastructure committee has currently proposed $5 billion in stimulus funds for intercity rail--not even a down payment on what it would cost to convert the U.S. to high-speed rail.
Investing in high-speed rails would be very expensive, but unlike tax cuts--the benefits of which can be siphoned off in the purchase of imported goods--the money spent would go directly to reviving American industry and improving the country's trade balance. That doesn't just mean jobs creating dedicated tracks or new rail stations: Though the U.S. abandoned train manufacturing decades ago to the French, Germans, Canadians, and Japanese, this kind of production could be undertaken by our ailing auto companies or aircraft companies--if the federal and state governments were to place orders. And building trains that would run on electricity would be a paradigmatic example of the "green jobs" that Obama often touts.
Though a massive investment in high-speed rail brings its own set of complications, it's worth keeping these kind of examples in mind when one hears from the Obama people that they can't find sufficient infrastructure projects to fund. The question I would pose is this: Are we not at some point going to have to go beyond repairing roads and bridges in our conception of public spending and public works, and contemplate the kind of ambitious industrial expenditures that the country made on war production in 1941?
It's simply not the case that high-speed rail doesn't require quick up-front spending - the California HSR system approved by voters in November is struggling to survive because they can't secure any funding from the bond markets. That money funds environmental impact studies, surveying, assessments from architects and planners - it may not be bricks and mortar, but that would create non-trivial amount of white-collar jobs.
The problem here is well-described by Ezra Klein. There are "shovel-ready" projects that relate to infrastructure, and there are long-term infrastructure projects that cannot begin construction in a year. But the Obama stimulus will only satisfy those short-term infrastructure needs. This sustains the economy of sprawl, and does not serve our long-term infrastructure needs.
That would all be fine if forward-thinking infrastructure investment were a regular priority of the government. But it's not. And though deficits don't matter at this moment in time, in three or four years, after we've finished with all this spending, they're likely to matter quite a lot. Spending new money will become harder, not easier. We may end up with an investment program that, particularly on transportation, entrenched a lot of our bad habits, did fairly little to modernize, and made it harder to fund infrastructure investment qua infrastructure investment down the line.
It's a serious problem, and I hope some money is carved out in the recovery package as well as the next highway bill for longer-term investment. Otherwise, we will fail to create a culture of sustainability and continue to fall behind the rest of the world, not to mention eliminating a key area of green jobs and manufacturing in the future.