My wife and I took advantage of a short break in the heat wave last weekend to plant some bushes in the back yard. We worked through the morning clearing the area and digging the holes, skipped lunch and headed off to the nursery to pick up the shrubs.
In the checkout line, I picked up a 3 Musketeers candy bar – the large one – and polished it off during the ride home. Energized by the sugar high, I planted, filled, mulched and watered in the new plants, took a deep breath and just about collapsed. The sugar high was great while it lasted, but once the initial rush was over, I was worse off than before.
At the 18-month mark, the United States government’s economic stimulus programs look kind of like that 3 Musketeers bar. It’s been mostly short-term sugar high stuff so far. Take the housing stimulus, for example. We got a nice boost through last April with the $8,000 first-time homebuyer’s tax credit. Then the tax credit expired and the index of pending home sales dropped by 30 percent in May and another 2.6 percent in June, according to the National Association of Home Builders. Then came the report that new home sales dropped by 27% in July. Sugar high.
The big question is, are we heading down that same track with the American Recovery and Reinvestment Act of 2009? Of the $787 billion in ARRA funding, about $105 billion is devoted to infrastructure spending and about $75 billion of that is directly tied to construction projects. Less than half has been spent so far and most of that went to high profile quick burn projects like blacktopping. Remember shovel ready? The shovels have come and gone and unemployment in the construction industry is still double the national unemployment. One in every five construction workers remains unemployed.
You want to know how to really stimulate the economy and push the unemployment numbers in the right direction? Move dirt. Excavate old crumbling infrastructure and combined sewer systems that harm the environment. Replace them with modern precast concrete stormwater systems. Rebuild unsafe bridges and deteriorating highway systems. Protect drinking water. Restore the levees. Create additional high speed rail corridors.
There is some evidence that meaningful infrastructure stimulus spending will occur in 2011 and 2012, when much of the Government Services Administration and Federal Transit Authority spending kicks in. Infrastructure spending under state control may start to roll out with some major projects coming online. That’s all good but it’s not enough. We need to concentrate more on real long-term infrastructure rebuilding – multi-year legacy projects that will still be paying dividends to communities decades from now.
There’s plenty of work to be done. The American Society of Civil Engineers’ 2009 Infrastructure Report Card gave the country an overall D rating, with wastewater, drinking water and roads all scoring at a near-failing D-. Total investment required to bring the infrastructure up to standard? The ASCE estimates it at $2.2 trillion.
How do we pay for all this? There’s no magic bullet, but here’s a start: make meaningful cuts in the federal budget (a line item veto for the President and term limits would help); charge user fees, such as tolls and increased gas taxes; continue to offer Build America Bonds and create other private equity options. None of this will occur, of course, in today’s political environment. It makes too much sense.
Here’s what happens when you make a national commitment to rebuilding the nation’s infrastructure. The construction industry goes back to work – and those construction workers will buy food, clothing, new vehicles and new equipment. They’ll spend money on entertainment, fix up their houses – and maybe even build new houses. The upward spiral will start, and it will be real growth. We’ve had enough 3 Musketeers economics. We’re talking high protein meat and potatoes here, with massive multi-year projects that give contractors enough confidence to hire workers and give workers enough confidence to spend the money they’re earning. That’s a real high – not a sugar high.
President, National Precast Concrete Association