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U.S. stimulus likely to target infrastructure needs
November 26, 2008 / 6:05 AM / 9 years ago

U.S. stimulus likely to target infrastructure needs

By Andrew Stern - Analysis

CHICAGO (Reuters) - The next government stimulus effort is likely to target America’s crumbling infrastructure, and experts say the funding is sorely needed with bulldozers ready to roll on scores of projects.

“We have projects that are shovel-ready -- the designs are complete, the environmental permits have been obtained, the right-of-way has been obtained, and the state is waiting to get funding,” said Wayne Klotz, the Texas-based president of the American Society of Civil Engineers.

For years, engineers and planners have cited a shortage of money and the absence of a national strategy to shore up America’s deteriorating roads, bridges, sewer systems, schools and airports that are traditionally planned and built locally with substantial federal funding.

The U.S. Conference of Mayors identified more than 4,500 infrastructure projects that could begin immediately and could be completed by the end of 2009 -- seeking to quell criticism that such projects take too long to help the struggling economy.

President-elect Barack Obama, who takes office on January 20, said he would propose quick passage of a stimulus plan large enough to give the economy a “jolt,” with the goal of creating or preserving 2.5 million jobs.

“Let’s figure out what projects, what investments are going to give the American economy the most bang for the buck,” Obama told a news conference on Tuesday.

“We are going to have to make sure that we are investing in roads, bridges, other infrastructure investment that lays the groundwork for long-term economic growth.”

Obama did not specify the size of the stimulus plan that some predict would be between $400 billion and $700 billion or more, but emphasized the money needs to be spent wisely with an eye toward shrinking the bloated federal budget deficit later.

Every $1 billion in spending on infrastructure generates 47,000 direct and indirect jobs, said Terry O‘Sullivan, head of the 500,000-member Laborers’ International Union of North America. His members have experienced a 10 percent drop in working hours, which are likely to fall further as local governments cancel projects and private construction slows.

The National Taxpayers Union says federal taxpayers should not foot the bill for infrastructure projects that cash-strapped state and local governments are unable to fund. Other critics cite projects such as Alaska’s infamous, and unbuilt, “bridge to nowhere” as examples of the risks of wasteful spending.


Total government spending on the nation’s transportation networks is currently roughly 40 percent of the $225 billion that is needed annually for the next 50 years, a government commission said in January.

A report card by the Society of Civil Engineers in 2005 gave poor marks to the nation’s infrastructure and estimated it would cost $1.6 trillion to fix. The price tag will be higher when the group updates its report card in March, Klotz said.

Supporters of infrastructure spending argue the stimulus plan should have come earlier and possibly instead of the $150 billion summer tax rebate and last month’s $700 billion allocation to bolster the financial system.

“I don’t think people are looking for a rebate check, they’re looking for a paycheck,” O‘Sullivan said.

In contrast to bailing out a failed bank, infrastructure spending creates something tangible like a road, a bridge or a building, Northwestern University engineer and infrastructure expert Joseph Schofer said.

Infrastructure spending will put construction workers idled by the housing downturn back to work, he said.

Globally, Europe has been steadily upgrading its infrastructure and China just announced $600 billion in infrastructure spending to stimulate its economy.

“Our infrastructure is falling apart. There are strong issues of economic competitiveness and ... we haven’t been spending at a reasonable rate,” Schofer said.

Editing by Cynthia Osterman

Our Standards:The Thomson Reuters Trust Principles.
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