Oh, Joe, it is on! You can trash-talk me or my family or even my questionable taste in basketball teams. But how dare you take a backhanded swipe at my dearly beloved stimulus? You know, the poor thing has no one to defend it but me. And me again. And yet again. So, its infrastructure spending was too “rushed,” and sent cash to the “least difficult and imaginative projects,” huh? Them’s fighting words!
OK, maybe some of its transportation infrastructure was a bit rushed. There were reasons for that. But some of it was invested in the far-sighted, merit-based, imaginative way that Joe wants to see, which was bureaucratically revolutionary. The stimulus also made unprecedented investments in less traditional and less shovel-ready forms of infrastructure, particularly the “creative ways to generate electricity without killing the environment” that Joe also wants to see. And like Joe’s excellent idea for an infrastructure bank—which, alas, exists only on paper—it used the power of competition to steer federal dollars towards worthy projects with long-term benefits, instead of just spreading money around the country like peanut butter.
On the transportation side, Joe has a point; most of the $48 billion in the stimulus went to relatively unimaginative road repaving and transit repair projects that could create jobs relatively quickly. It was, after all, a stimulus bill. And by focusing on simple repairs that states eventually would have had to do anyway, rather than new sprawl roads to nowhere or dubious new earmarks or even worthy new mega-projects on state wish lists, the Recovery Act was as fiscally responsible as a $787 billion blast of borrowed money could be. It reduced state repair backlogs and future federal obligations, instead of expanding them. It added spending now to reduce spending later.
That said, the $1.5 billion TIGER program created by the stimulus was straight out of Joe’s wonky dreams, rewarding the most innovative transportation projects with the best economic and environmental benefits even if they didn’t fit into traditional silos. It attracted $40 worth of applications for every dollar in grants, a testimony to the pent-up national demand for smart transportation policy. Joe will be happy to learn that a TIGER grant is getting New York City’s Moynihan Station project off the ground. There’s also lots of money for public-private partnerships to expand freight rail capacity, one of the best ways to improve the long-term efficiency and sustainability of our economy. There’s lots of good stuff.
Incidentally, the $8 billion high-speed rail initiative in the stimulus, while widely misunderstood and not without problems, is another competitive, innovative, oversubscribed program designed to improve the long-term efficiency of the economy. And the New York-New Jersey rail tunnel that Joe mentioned had stimulus money, too, before New Jersey Governor Chris Christie killed the project.
Anyway, there’s more to infrastructure than traditional transportation projects. The stimulus also included $7 billion for broadband lines, $11 billion for a smarter electric grid with more capacity to move renewable power from windy plains and sunny deserts to populous cities, and $20 billion for upgrading health information technology to reduce health care costs as well as medical deaths caused by bad handwriting. Those are all properly understood as investments in American infrastructure. And Joe wanted clean energy projects? The stimulus included unprecedented investments in wind, solar, geothermal, advanced biofuels, electric vehicle batteries and clean-coal technology, plus cutting-edge research into the clean energy of tomorrow. It poured $90 billion into the green-energy sector, when the feds had been spending a few billion a year.
Joe will also be pleased to hear that the stimulus included a few new financing mechanisms that could serve as infrastructure bank models. The Build America Bonds program leveraged modest federal subsidies to subsidize tens of billions of dollars worth of municipal bonds for infrastructure projects. The Energy Department’s loan guarantee program is using the power of the federal balance sheet to back innovative clean-energy projects that commercial banks wouldn’t touch during the downturn, including the world’s largest wind farm and several of the world’s largest solar projects. The loan guarantee project has had its detractors–including former Obama aide Larry Summers–but as you’ve surely already guessed, I’ve rallied to its defense.
As for Joe’s creamed spinach: I like the infrastructure bank, too. I also like the related idea of an independent Clean Energy Development Authority to streamline the loan program and move it out of the political realm. But when John Kerry tells Joe that $10 billion in federal aid will magically mobilize $640 billion in private investments, I have to admit I’m skeptical. If he’s talking about giving states loans instead of grants for basic infrastructure, that’s terrific, but governors will riot when they find out they’re suddenly expected to pay for their own asphalt. If the bank is simply providing seed money for better infrastructure projects, that’s nice, too, but what would produce the return on private investment? I like the concept of an infrastructure bank as a way of making better choices with federal dollars, but I’m not sure it’s a panacea for our chronic underinvestment in infrastructure.
I do have some ideas about new approaches to infrastructure that could help address our chronic underinvestment, but they’re for a story I’ve written for the dead-tree edition. I also think the Obama administration did make one big mistake regarding infrastructure funding, but I’ll get to that in another post.