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Con: Economic boost from new spending not instant

Economic boost from new spending won't come for a more than a decade

Posted: March 30, 2012 - 12:04am

WASHINGTON — They say the definition of insanity is doing the same thing over and over and expecting a different result.

That’s what spending more on infrastructure and transportation to improve the economy would be: insanity.

Infrastructure and transportation may have benefits, but turning the economy around isn’t one of them.

For one thing, major highway projects are S-L-O-W. The Federal Highway Administration says major highway construction projects take 13 years to complete. Any project that won’t be finished until today’s first graders are in college is hardly going to jumpstart the economy.

Second, it’s been tried and it failed. President Barack Obama’s stimulus had $105.9 billion in infrastructure spending. The unemployment rate when it became law in February 2009 was 8.1 percent. In February 2012, it was 8.3 percent. Whatever the stimulus went for, it clearly wasn’t jobs.

But there are things our government can do to help the economy turn itself around.

Among them:

• The administration and Congress should recognize that regulations cost jobs, and then eliminate those we don’t need. A case in point is the administration’s new Utility MACT rule, which requires utilities to spend $6 billion on new equipment for plants — officially to cut pollution — but unofficially to phase out coal to make wind and solar more competitive.

The utilities don’t have $6 billion lying around, so they’re closing plants, cutting an estimated 1,850 jobs now and ultimately leading, directly and indirectly, to the loss of as many as 1.44 million jobs by 2020.

The pain doesn’t stop there. Because as many as 68 fewer plants will be available to supply the nation’s electricity needs, and wind and solar can’t make up the difference, electricity prices are rising — which makes it more expensive for businesses to grow, and more difficult for many ordinary citizens to make ends meet.

• The Senate should pass the REINS Act, approved by the House in December, to require federal agencies to submit major new regulations to Congress for approval before they take effect. During the first 26 months of the Obama administration, federal agencies imposed more than 100 major regulations, defined as a regulation costing over $100 million to implement. This costs the public $38 billion, on top of the estimated $1.75 trillion the federal government itself estimates that regulations were already costing the public every year.

• Congress should facilitate the approval of the Keystone Pipeline, the Alaska Natural Gas Pipeline, responsible drilling offshore and in Alaska’s Arctic National Wildlife Refuge. It also should enforce laws currently being broken that require the Department of the Interior to issue drilling leases in a timely manner. Drilling for natural gas in the Marcellus shale formation in Pennsylvania and West Virginia alone created 57,000 jobs in 2009. Imagine what a responsible permitting policy for oil and natural gas nationally could do for employment, and what good a more stable and lower-cost energy supply could do for private sector confidence.

• Repeal Davis-Bacon Act. There is, however, something related to infrastructure and highways the federal government can do to help jumpstart the economy: eliminate the racist pork that is the Davis-Bacon Act. Davis-Bacon was adopted in 1931 to keep “undesired” racial and ethnic groups from employment on federal construction jobs and to enhance the political benefits of pork-barrel spending. Davis-Bacon remains racist, as it discriminates against the non-union labor force, where most blacks in the construction industry are employed. Repeal of Davis-Bacon would create approximately 31,000 jobs quickly and save the taxpayers a billion dollars a year.

The road to prosperity has been blocked by needless regulations. More government spending on infrastructure and highways isn’t the best way forward. There are far more effective routes available.

• Ridenour is president of the National Center for Public Policy Research, a conservative think tank.

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