Obama Needs to Think Bigger About Infrastructure

President-elect Obama has proposed a $750 billion stimulus plan to get the economy going again. I believe he is thinking too small. He has limited the size of the stimulus because of concern about the budget deficit. That horse has left the barn. He expresses hope that a stimulus package will revive the economy in the second half of the year. Even if you could persuade people to spend money this year, I think that is a terrible idea. State and local government budget shortfalls are going to be so huge in 2009 that another major bailout is inevitable.

The U.S. does not need a stimulus package. It needs to rethink its economy. Our financial system is in shambles. President Bush nationalized the money center banks and then gave them hundreds of billions without any strings attached. As a result, trust has evaporated in the financial markets and no one wants to do a big transaction to which the Federal government is not a party. You can't fix that by asking consumers to spend a few hundred dollars. Besides, that only postpones the day of reckoning because consumers are already overextended.

We need to ask ourselves what kind of economy we want. On current course and speed, the US economy will likely deteriorate in a manner similar to what the US auto manufacturers have experienced over the past decade. I believe it is possible to return to the vibrant growth that has historically characterized our economy, but it won't happen without a long-term strategy of transformation. In terms of capital investment, I suspect we will need to invest trillions over the next twenty years. As unattractive as budget deficits are in principal, they are nothing like as threatening as a moribund economy.

Thanks to Katrina, the I-35 bridge, and other disasters, no one argues against the need to rebuild America's infrastructure. What is missing in Washington is the insight that even when it doesn't kill anyone, America's infrastructure is second rate on its way to third world. We used to be proud of the fact that our infrastructure was the best in the world. Hurricanes caused less damage here than they did in neighboring countries. When I was a kid, there was an ice storm in the Northeast that knocked out the power for a few days and the nation was shocked. A few weeks ago, a similar storm knocked the power out in some New England communities for more than a week and hardly anyone noticed. Why? Because the country has gotten used to the fact that things don't work very well. In the first six months of this year, the section of Silicon Valley where I work lost power half a dozen times for periods of many hours. A few weeks ago, the town had to shut off water to our neighborhood for half a day. And I won't mention cellular coverage, which is worse than in most of Africa. I'm talking about Sand Hill Road in Menlo Park, the Broadway of America's venture capital industry.

The really peculiar thing is that most Americans don't see enough of the world to understand how far behind we have fallen. On a trip to Italy last year, I was shocked at how much better their roads are than ours in California. I had better cellular coverage on a ship in the middle of the Mediterranean Sea than I have in many parts of Silicon Valley. Our kids have fallen behind those in Asia and Europe, who spend roughly twice as much time in school as ours do. Why? Because our school year and school day remain unchanged from a century ago, when the country was agrarian. Add all this up and it's no surprise that incomes in America were static during the last economic upswing and are now declining. Our national infrastructure is so far gone that we can expect lower highs and lower lows in future economic cycles.

We need to stop thinking about infrastructure as an economic stimulant and start thinking about it as a strategy. Economic stimulants produce Bridges to Nowhere. Strategic investment in infrastructure produces a foundation for long-term growth. Imagine a twenty-year plan to upgrade our power grid, public education, transportation systems, and other infrastructure. The longer the time horizon, the easier it will be to align interests between those doing the work and those paying for it. President-elect Obama has a brief window of opportunity to align the country around an economic Manhattan Project. I hope he seizes it.

Comments

[CaptD]

Everyone now wants money for their "special" project that will help bring economic recovery to them!!!

We need a National plan that lists which areas are going to get help first and at what % we are going to fund them. Consider these decisions:

Should Health Care reform come before defense R & D spending; if so who is going to defend us in the future our aging population?

Should we triple our Doctor & Nursing school training so that we can reduce the "shortage" of them to reduce costs; plus allow folks in those fields with over 20 years experience "test' to get the next level of certification?

Should we repair roads or build new electrical transmission lines first?

Should we build Solar or spend the money on oil futures & pump the oil into the ground to use or sell another day because it is cheaper thatn drilling new wells?

Let's get serious and post the choices and get folks involved and really plan our recovery!

[research]

All of the above. You have already heard that one of the problems is

NOT ENOUGH shovel ready programs.

[oldbrit]

Look at it this way: Building infrastructure will boost the economy, no matter how we spend the money, so it only makes sense to spend the money on things that give us a long-term benefit.

The biggest infrastructure problem we have is our health care system. Putting in a universal, taxpayer funded healthcare system would benefit everyone by reducing costs for all businesses, making it easier for entrepreneurs to start new businesses, reducing monthly expenses for taxpayers, and improving the daily lives of more Americans than any other thing we could do.

In the U. S., we spend almost twice as much per capita as every country that has universal health care. The 38 countries with better health care outcomes for their people all have universal health care systems according to the World Health Organization.49% of our per capital health care costs are already funded by taxes. Most of the 38 ahead of us spend less than we pay in taxes for per capita health care costs. Germany - which is ranked number 1 - spends less than 60% of what we spend per capita.

A universal, taxpayer funded system could get us in the top 10% and reduce costs by at least 40%.

Improving Americans' health, making us more competitive in the world, and reducing cost and risk of starting new businesses that create and market innovative infrastructure products for renewable energy, environmentally friendly transportation and construction, communications, etc,, is the best possible economic stimulation we could have.

[uneeda]

a good post.....the key word is "strategy"......we no longer live in a day where it is enough to debate the relative merits or failings of keynes,galbraith or friedman.....nor is it enough to strategize solely about american life.........we are now all together in mcluhan's global village with all the various converging forces interacting synergisti­cally.....­we need much more than a mere local plan if we are to survive ....this means the selection of ministers from all shores who are committed to reconstruction of a new political and economic system which values a balance between our needs , our resources and the environment.......a starting point is just a few days away.....so far,I'm afraid it looks very much like we are putting our bets on the same people as before.....I hope that I will be proved wrong

[brocko]

Most of these jobs he's creating are for men. A lot of women are the heads of households and are being laid off. Where are the jobs for them?

[texfly]

What can we do with $750 billion? We could build, install, and maintain enough solar-electric generators and wind turbines to supply half of ALL of our electricity needs including a switch to all-electric light duty vehicles. Now there's a goal worth going after. Stimulates business (small and large), jobs (several million of them) and ulimately saves $700 billion per year in payout for foreign gasoline. And we shouldn't forget that "We the People" are footing the bill so we should expect a good return on that investment!

[Artos]

You're right He does need to think bigger and so does the rest of America. I have at least two rather large ideas for projects right here on Earth and one for our goal of a base on the Moon and a mission to Mars.
All of my ideas propose creating the same sort of National energy and spirit that was brought to bear on WWII, but this time we do it without the War. Without that same energy and spirit we are lost. My first Project for America is a Model City built somewhere in the Center of the country. It would incorporate all the best ideas for a Green Lifestyle and futuristic methods of transportation. The second project entails building a major canal along our joint border with Mexico. This canal would be deep and wide enough for shipping. It would begin somewhere below National City California and extend until the Rio Grande and then the Rio Grande would be dredged even further. This Canal would not only provide a new shipping lane for both the U.S. and Mexico but also water for irrigation and drinking all along it's length. These Projects would be both lengthy and provide thousands of jobs. They would also be major Achievements. All this needs is a Leader to get it started and a nation with some drive.

[MBAsoftwaredeveloper]

Good article. The Obama infrastructure plan is looking like a big dud to me because it ignores the fact that we need technological innovation, not just picks and shovels.

As you said in the article, no one questions the need for immediate repairs to our bridges and roads. The infusion of money will also help stabilize state budgets, which are in free fall right now.

One idea whose time has come, in my opinion, would be a national network of high-speed maglev trains linking our major cities. Only maglev can achieve the high-speeds of upwards of 300 miles per hour with assured passenger safety and comfort. The new system would eventually supplant and overlay the existing Amtrak rights of way.

The Stage 1 goal of this new train network would be to effectively replace air travel for trips under 3 hours or about 1000 miles. This would have the benefit of elimination millions of gallons of jet fuel consumption each year. The technology for maglev has already been deployed in China commercially.

A recent updated review of the technology is at the following link:

http://faculty.washington.edu/jbs/itrans/suppes.htm

As we speak, there are proposals for several maglev train routes in the United States, Las Vegas to Los Angeles, Baltimore to Washington etc.

There are proposals for dozens of uncoordinated state high-speed conventional rail systems.

Why not a maglev Czar to create a master plan for a robust national interoperable system?

[owleye]

Oh yes -- Where are the high speed, electric, light weight trains zipping between every city in America powered by the new energy grid that distributes geothermal from the West, Wind from the Prairies/Coasts and Photo/Voltaic from all over? And the best deal -- the trains and the grid run
down the center of the interstate highway system -- and by passes the freight lines. The US can never get control of the rails controlled now by Burlington Northern, Union Pacific, CSX and Northfolk Southern and CN to get passenger service off the the ground. The US doesn't need more roads.
We are so far behind Great Britain, Europe, Asia and Japan as MBA Softwaredeveloper points out.
With 900 cars per thousand drivers in the US, who would buy an American car, even if one worth buyiing were made. There's no credit! Electric RR will create thousands of permanent jobs in the
US that cannot be outsourced. You can't get a phone bank operator to run the train to Peoria!
And everyone pays back the cost of the trains over 20-30 years. Long term investment in long term jobs with a long term income stream. Everyone is so stuck on short term profits. I am with u all the way MBA Software. I rode the famous TurboTrain from Toronto to Quebec. Man was that fast....
But jet engines won't work today, but speed sure does.....

[WTP]

There's only two people that I've heard calling for a national re-investment in our rail lines: Congressman Dennis Kucinich and author James Howard Kunstler.

The problem is that American politicians are afraid of the implications a heavy investment would bring: Backlash from the auto industry and its unions and the need to totally retool American cities and towns.

Rail would mean that we would have to organize ourselves around central points, such as depots. Really efficient rail would mean sprawling suburbs would be inefficient at best and completely unworkable at worst (who wants to drive 45 minutes just to get to the train station to ride another 45, if you can just walk to the train station)?

That's a big problem for an economy that, up until recently, was based on housing starts. For at least 25 years, we've stripped our economy down from one that sells goods and services to one that sells the infrastructure on which to base an economy (housing and transporta­tion--i.e. cars). The only other thing we sell is the financing to sell everything else.

But with Wall St. in the tank, the mortgage industry in disarray, and Detroit begging for a bailout, there's no better time to make some sensible allocation of resources into rail.

The question is, how do we move this discussion from the Kunstler-Kucinich fringe into the mainstream of the bailout talk?

[melpol]

Pray that the trillion dollar bailout of The U.S. economy will work. If it does not the national debt will be over 8 trillion dollars. That huge debt will cause a loss of faith in the U.S. dollar and the bankruptcy of the government. The next step will have to be restructuring. This can only be done by keeping the profitable states and letting the rest go.

[oldbrit]

"We need to stop thinking about infrastructure as an economic stimulant and start thinking about it as a strategy. Economic stimulants produce Bridges to Nowhere. Strategic investment in infrastructure produces a foundation for long-term growth. Imagine a twenty-year plan to upgrade our power grid, public education, transportation systems, and other infrastructure."

Exactly - Strategically building infrastructure will also stimulate the economy - with the long term benefits you mention.

The problem is that we have a culture of greed which allows us to falsely believe that infrastructure, equal human and civil rights for all, universally excellent public schools, universal health care, environmentally clean technology and energy generation will hurt our individual bank accounts.

When others are successful, we falsely believe we are diminished because our self-esteem is based upon having more material possessions and net worth than our neighbors.

Most Americans do not realize that other countries have better infrastructure - from Internet service to healthcare. Other countries are ridiculed and we are told that we do everything better because the wealthy don't want to risk their wealth. Building a 21st century economy on a 21st century infrastructure will necessarily shift wealth and make those who have it work to retain it instead of sitting around the swimming pool open their financial statements.

[TMock]

Sustainable Infrastructure

While the politics of the economic recovery plan continue, Sustainable Land Development International (SLDI) has offered the Obama-Biden Transition Team a proposal designed to make the process, and our future, more sustainable... http://www.sldi.org/newService/SLDIJan2009.html

In a transparent and public proposal to the Obama-Biden team, SLDI has offered a public-private partnership, its Sustainable Land Development Best Practices System, and the breadth of its research and collective knowledge to combat the country's economic woes, enhance environmental stewardship and increase social responsibility - all at the same time.

SLDI, a developer-led and cooperatively-owned technology and information resource association, is now fully positioned to transform the industry that creates the very infrastructure of our civilization. Sustainable development starts with our global infrastructure. If it is unsustainable, ultimately nothing else can be.

Please click here to review the SLDI letter and proposal delivered to the Obama Transition Team - http://www.sldi.org/Pressreleases/pressrelease122308.html

Terry Mock
Executive Director
Sustainable Land Development International
www.SLDI.org

Promoting land development worldwide that balances the needs of people, planet and profit - for today and future generations.

[BabsfromKansas]

And i hope he listens to you! Excellent post!

[harveyr2]

Obama and his administration have only their best interest in mind. His plan is an insult to all Americans.

Remember, we were told that we needed to move fast to approve TARP.

Now, the Pessimist in Chief, ooops, the Fear Monger is Chief, ooops Chicken Little is telling us that the government is the only entity that can fix this mess. Such hubris. Obama is not the ONE.

[surferjay]

Are you talking about bush?! bush had only the best interest of his friends and family as proven by the war contractors and Wall Street ripping us off for trillions! Most of Obamas proposals will benefit the poor and middle class which have suffered for the last eight years under bushwacker. bush used fear to ruin this country more than any terrorist has!

[tandrmcdonald]

How very thoughtful of you to point out all of my country's deficiencies. What are you doing to improve the situation? If you're so very concerned about the shape America is in, why didn't you open your big sloppy yap a few years ago? Maybe when BushCo invaded Iraq and turned the military over to Haliburton, Blackwater and Kellog, Brown, Root. and the economy and energy policies of his administration over to the banking industries and Dick Cheney's buddies?
Or were you still touring Europe and admiring the school children and the scenery?
It's so easy to armchair quarterback.
If you have a better plan than our president-elect, publish it! Otherwise, in the words of that great American curmudgeon...Stifle yourself!
Gramma Rose

[Natalie4Obama]

Another good point is that when I lived in London I could get to Paris in 3 hours, Brussels in 2 and Amsterdam in 5.

I was looking into taking the train to visit a friend in Kansas and the quote was 40 hours from New York.

The reason why this country hasn't advanced is because money has consistenly been spent on the wrong things and lobbyists for big money companies get what they want.

Unless we start striving for utopia rather than profits, this country will have a rude awakening.

[WritusMaximus]

I agree. We must view this massive expenditure as a strategic investment. As such, there is no need to rush. Obama, caught up in Bush and Paulson's "emergency" mantra, took the bait hook, line, and sinker and voted for the Wall Street bailout, which was a bust. Now Obama says we need another emergency infusion of trillions of dollars RIGHT NOW. You know what that means---it's an emergency and therefore we don't have time to read it or worry about what's in it---sound familiar? All we have to do is trust the politicians once again and just go along. Obama was fooled once, looks like he now wants to get even.

[ibsteve2u]

The failure that I see is the money leak isn't fixed.

Obama plows a bunch of money into infrastructure. With the exception of housing and 90% of food costs, the rest of the wages paid out go to buying "stuff" - from electronics, to foreign cars, to American cars with foreign parts, to gasoline - from offshore.

It doesn't recycle - and worse, with CEO pay and the income tax bennies the Republicans gave each other, a great big slice of whatever infrastructure expenditures are made will be taken off the top - and our "fat cats" have a history over the last decade of two of promptly investing that slab of the pie offshore where they can get bigger returns due to lower you-name-it.

Like I said - too much of what will be pumped into our economy will promptly leak out of it.