Shovel-Ready, Take II: Would Obama Infrastructure Plan Create Jobs Now?

Sep 8, 2011 6:00am
gty barack obama dm 110908 wblog Shovel Ready, Take II: Would Obama Infrastructure Plan Create Jobs Now?

ABCNEWS (syndicate)

President Obama isn’t likely to use the term “shovel-ready” in his jobs speech tonight, but he is expected to call for billions in new government spending for infrastructure projects he believes will lead to immediate hiring.

“We’ve got roads and bridges across this country that need rebuilding.  We’ve got private companies with the equipment and the manpower to do the building,” Obama told a crowd Monday in Detroit. “We’ve got more than 1 million unemployed construction workers ready to get dirty right now.”

If the refrain sounds familiar, it’s because it is.

Sources knowledgeable about the administration proposals say Obama might seek to fast-track up to $50 billion in infrastructure spending in the next year as part of a broader transportation package, an idea he first proposed a year ago but which failed to gain traction.

The White House has not provided details of the plan or estimates for job creation. But economists on both ends of the political spectrum say infrastructure improvements might not make much of a splash in the short-term.

“It’s not good stimulus,” said Alice Rivlin, a Democratic member of the president’s Debt Commission and former head of the Office of Management and Budget.

“It doesn’t come online fast enough. If you’re really talking about things that will create jobs quickly, you need to rely on either direct government hiring in the manner of things done in the Great Depression, or demand-side things that will get more money spent by wage earners,” she said.

Alan Viard, an economist with the conservative-leaning American Enterprise Institute, said infrastructure spending can be “reasonably powerful” but cautioned additional funding might not be the most effective way to spend the taxpayers’ dime.

“I think we need to be cautious how much we expect any of these packages to do, regardless of who’s proposing them,” Viard said. ” I think the jury is out on the question of how much demand stimulus can help when you have one of these long recessions following a financial crisis.”

A January 2010 Associated Press analysis of Recovery Act spending on roads and bridges “had no effect on local unemployment and only barely helped the beleaguered construction industry,” regardless of how many dollars lawmakers threw at the various projects.

Still, industry advocates say the roughly $48 billion allocated in 2009 kept tens of thousands of workers on the job, repaired 34,000 miles of roads, and repaired or replaced 1,300 bridges, among other improvements.

Money from the stimulus package helped keep 325,000 workers employed in the second quarter of 2011 alone, according to Recovery.gov. (Officials say it’s difficult to tabulate how many cumulative jobs were created in the three-year program because infrastructure spending is project based.)

“What is uncontestable is that those infrastructure projects that were funded by the recovery act were very well managed, came in on budget or under budget, and led to the creation of many, many jobs, by an outside, independent analyst,” White House press secretary Jay Carney said Tuesday.

John Horsely, executive director of the American Association of State Highway and Transportation Officials, said at its peak a year ago, the Recovery Act helped employ 64,000 workers on highway projects.

He says a concentrated infusion of $50 billion now could lead to the employment of hundreds of thousands more.

“The president wants to jump-start the economy and create jobs, and so if he could manage to get the authority to spend $50 billion all in one year, you would probably have a much higher number of jobs created, if it all happened in one year,” Horsely said.

But that’s a big  if.

For their part, Republicans have signaled they are not willing to support additional spending that might add to the deficit, even if they say they’re not opposed to initiatives to improve infrastructure.

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