The lesson here is that we have a right to be skeptical of so-called stimulus packages. The Federal Reserve can effectively stimulate the economy. There are certain automatic government programs, like unemployment insurance, which also do it. But the history of the past century suggests that politically designed, ad hoc stimulus packages rarely work.
No, what the economy needs now is something to take the place of retrenching consumers. That means a major fiscal stimulus. And this time the stimulus should take the form of actual government spending rather than rebate checks that consumers probably wouldn’t spend.
Who you gonna believe?
David Brooks is spot-on with his call for major investment in transportation infrastructure, both for near-term economic stimulus and for a sustainable recovery. His recommendations of what to build are outdated, however.
As he notes, a way to put people to work would be to repair and maintain our existing highways, bridges and transit systems. But building new highways was the project for an earlier era, the 1950s, when gas was cheap and President Dwight D. Eisenhower created the Interstate System.
Today we urgently need to build the infrastructure for a clean-energy economy and reduced dependency on oil. Soaring gas prices made our vulnerability clear: Americans flocked to public transportation or took to their bicycles only to find the transit systems underfinanced and the roads dangerous and inhospitable. Half of our urban-dwelling citizens found they had no transit at all.
If we’re going to go into debt to build for the future, we must do so to complete our transportation network with high-speed rail, modern public transit, streets that support safe biking and walking, and, yes, well-maintained highways.