In his radio address on Sunday, Obama sketched a progressive stimulus spending package that’s kicked up quite a bit of chatter.
Some transit advocates were ticked off that roads and bridges got a shout-out but there was no mention of transit. Michael O’Hare goes so far as to say that "Obama has, on the whole, dropped the ball on climate change; he’s not anti-science or anti-environment, but he’s failing a big test here."
Ryan Avent says to chill: the road stuff is likely about repairing existing road infrastructure, not laying new roads. I’d add that transit’s been mentioned by Obama’s team several times since he was elected — the latest on Friday — so it’s hard to believe there won’t be substantial transit spending in the final bill.
Tyler Cowen gives it a thumbs down:
When it comes to fiscal policy, many projects are not very good. Most projects take a long time to come on-line. The fiscal stimulus should, most of all, be directed at an effective marginal incentive scheme to keep up state and local spending. I am still enthusiastic about Obama’s economic team, but I am starting to worry a little. How many of these expenditures actually help needy people? How many actually will help the economy?
I think Cowen’s too pessimistic. Particularly, earlier in the post he says of weatherization and efficiency retrofitting, "The mere fact that you can write in the comments section: ‘Spend more today to spend less tomorrow!’ does not convince me." One of his commenters asks, sensibly:
Why not? … There’s nothing contradictory about a strategy of trying to spend more today (in a recession) so that we can live well tomorrow with less spending. It’s called “investment” and this is a good time to ramp it up.
There are of course legitimate questions about how fast various stimulus measures can get rolling. The New York Times offers a few numbers:
State officials say a lack of financing has stalled billions of dollars in projects. Gov. Arnold Schwarzenegger of California told Mr. Obama this week that the states were ready to break ground with $136 billion in infrastructure projects that could provide new jobs within two years.
The American Public Transportation Association, which represents local mass transit authorities, said there were $8 billion in "ready-to-go" projects that could preserve or create thousands of jobs and provide more energy-efficient transportation.
How much of that $136 billion is "green"? $8 billion ain’t much stimulus in a $13 trillion economy.
Another key question is how much money could be pumped into building sector energy efficiency, and how quickly. The feds and states do some weatherization of low-income homes through LIHEAP, but those are not large agencies and probably couldn’t handle tens of billions dumped on their heads. Beyond that, what? Is there an agency or program in place to retrofit federal buildings? Or to offer small- and mid-sized businesses assistance with energy retrofits?
Is the retrofit market mature enough? Even if tax credits or grants were more available, do we have the business and finance models to handle them? Another significant factor is the non-fungibility of labor. Some of the retrofitting trades are high-skilled, with high barriers to entry. Another commenter on Cowan’s blog:
People capable of working on commercial HVAC systems are few and far between even in this economic climate. None of them are short on work and the barriers to entry are pretty high. … I don’t think I need to explain on economics blog what the effects of throwing a lot of money at small pool of labor with high barriers of entry would be.
The government can help lower those barriers to entry and can help ramp up vocational training, but how much impact would be felt in under a year or two?
I’m a huge proponent of green stimulus, but it’s a good time for everyone to get hard-nosed about where money can most quickly be injected. This is fairly complex and technical stuff and most people making confident pronouncements about it — myself indubitably included — are talking out their blowholes. We’re talking about cramming an enormous amount of money into an enormously complex economy at an historical moment without clear precedent technologically, socially, or economically. If the 21st century has taught us anything it’s that we have no effing idea what’s going to happen. Obama’s proposals seems directionally correct to me so far, so hurray for that. Let’s buckle our seatbelts.