On Vox: Draft of Obama recovery plan
(Full text ported from Vox on 9/14/10)
The summary draft of the Obama administration's national recovery/stimulus plan is now available.Calculated Risk summarizes what's in it.My impression after a quick read is that there are very few items that seem like a bad use of money.
The question is whether the spending as proposed would achieve the goal of sustainable economic recovery. Unfortunately, I don't think it does enough.
It includes $518 billion in new spending and apparently $300 billion in tax cuts. But detailed explanations for each item show the plan deliberately not paying for all available short-term spending opportunities. The spending for transportation is a good example:
$30 billion for highway and bridge construction projects. It is
estimated that states have over 5,100 projects totaling over $64 billion that could be
awarded within 180 days. [note: this represents $34 billion in missed spending]
$1 billion for Capital Investment Grants for new commuter
rail or other light rail systems to increase public use of mass transit and to speed projects
already in construction. The Federal Transit Administration has $2.4 billion in preapproved
projects. [note: this represents $1.4 billion in missed spending; $35.4 billion overall]
$2 billion to modernize existing transit systems, including
renovations to stations, security systems, computers, equipment, structures, signals, and
communications. Funds will be distributed through the existing formula. The repair
backlog is nearly $50 billion. [note: this represents $48 billion in missed spending; $83.4 billion overall]
$6 billion to purchase buses and equipment needed to
increase public transportation and improve intermodal and transit facilities. The
Department of Transportation estimates a $3.2 billion maintenance backlog and $9.2
billion in needed improvements. The American Public Transportation Association
identified 787 ready-to-go transit projects totaling $15.5 billion. [note: this represents $9.5 billion in missed spending; $92.9 billion overall]
$1.1 billion to improve the speed and capacity of intercity passenger rail service. The Department of
Transportation’s Inspector General estimates the North East Corridor alone has a backlog
of over $10 billion. [note: this represents $8.9 billion in missed spending; $101.8 billion overall]
$3 billion for airport improvement projects that will
improve safety and reduce congestion. An estimated $41 billion in eligible airport
infrastructure projects are needed between 2007-2011. [note: this represents $38 billion in missed spending; $139.8 billion overall]
Now, a strong case can be made against highway or airport projects given the need to convert to a more fuel-efficient economy, so a good deal more than half of this might not be good spending from that perspective. But from a strict perspective of economic recovery through government infrastructure spending, this plan is missing between $60 and $140 billion in transportation spending alone. A straight swap of that spending in exchange for fewer tax cuts would be a good idea.
But what's really missing is a shift in the big picture. $1 billion for speeding up light rail would be a minimally adequate amount for a single light rail system such as Sound Transit's Link system here in Seattle. But for a national number it's laughably small. $2 billion for improving rail safety is enough to fix things in one or two states, not the whole nation. $1 billion to improve intercity rail is weak just compared to the $10 billion in necessary improvements in existing services, to say nothing of how small it is compared to the need for a national high-speed rail system (or at least starter systems in key regions of the country).
I do like that this plan seems to provide a lot of assistance for state and local governments, though it's targeted to specific areas such as education rather than serving as a general fiscal safety net until economic recovery brings higher tax revenues. That should be enough to prevent severe cuts in government services producing even greater economic contraction.
I hope that the obvious shortcomings in this approach can be improved by the Democrats in Congress. I can understand why the longer-term stuff like high-speed rail isn't in this bill, though I hope that's dealt with by later legislation. But there's really no excuse for identifying places where money is ready to be spent for a specific set of improvements and not doing it now.
Locally, I can only hope that University Link counts as one of the identified federally pre-approved projects for light-rail. If so, most of that $1 billion for light rail would be coming our way to speed up construction to Capitol Hill, UW, and Northgate.