Monday, October 25, 2010
Infrastructure Spending: False Expectations
One of the benefits of the stimulus bill, as often touted by its proponents, is the investment in infrastructure. This article, however, describes how the most obvious and widely perceived strengths of the stimulus is actually quite a weak economic improvement. Firstly, actual investment in infrastructure formed less than a fifth of the overall funds distributed by the stimulus. Furthermore, actual progress and construction has been a slow process held back by red tape and bureaucratic hurdles. Many of the projects have yet to receive their funding and may even result in counter-productive end goals. I personally do not blame this solely on President Obama, but am definitely disappointed in the poor distribution and usage of stimulus funds. The president is currently proposing a $50 billion infrastructure plan that looks very promising, but I fear that the debacles surrounding the stimulus will make it hard for this new proposal, and other future plans, to actually come to fruition.
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The question about the stimulus spending is whether we really want consumers to go back to their old spending habits. In the 1980s, the average citizen of the United States greatly improved their standard of living and increased their consumption by a significant amount. However, this increase was not funded by an increase in income but rather, by an increase in borrowing opportunities. The Obama Administration must find a way to shift from consumption to investment so that there can be more research and innovation in the American market. This will create jobs, help the trade deficit and also create a stronger base for future generations.
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