Monday, December 29, 2008

Stimulus Does Have to Mean Pork

Clifford Winston puts a spin on the Obama Stimulus plan. A nice optimistic thought, but given the penchant of Congress to use "stimulus packages" as a pork barrel project, (See the NASCAR provisions in previous bills), do you really think that pork won't be a part of the bill?
President-elect Barack Obama says he will create or protect some three million jobs by spending a massive amount of federal dollars to build roads and other "shovel ready" government projects across the country. The projects in this economic stimulus package, he says, will "not be based on politics and lobbying."

Nice thought. But already Mr. Obama is facing pressure by public officials from coast to coast to run in the other direction. In recent weeks, for example, the U.S. Conference of Mayors forwarded to Congress a list of 11,391 infrastructure projects that, we are to believe, are "ready to go." Several media outlets quickly pointed out that this list is full of pork -- the most flagrant examples are a polar-bear exhibit, an antiprostitution program, and a water-park ride. The nation's governors, transit officials, and the American Association of State Highway and Transportation Officials have sent along their own lists, which are likely to contain their own "bridges to nowhere."

But the deepest problem Mr. Obama faces is not the diversion of funds to pork-barrel projects -- contrary to popular belief, this generally amounts to a modest share of public expenditures. The problem is rather that infrastructure spending itself is productive only when it produces a large social return.(emphasis added)
Considering that Congressmen need Mayors as much as Mayors need Congressmen, do you really believe that at stimulus bill won't be pork laden?

However, in defense of Winston, he does go on to point out the problem with federal transportation spending, i.e. that it misallocates funds and misallocates incentives with respect to how federal dollars in transportation projects.

Of course, a larger problem for me is how does infrastructure spending broadly stimultate the economy? The New Deal was laden with infrastructure spending and much of it didn't really produce long term economic gain, while it did underemploy millions of people.

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