Kimball Corson's  Instablog

What if Obama had really gone forward with his program to rebuild America’s infrastructure that was a major part of the original stimulus package, but somehow largely got derailed? What if, instead of paying and then rolling over most unemployment benefits, the administration had adopted a Work Projects Administration (WPA) type of program to employ such welfare recipients and implement rebuilding America’s infrastructure under the stimulus program, largely along the lines of what was originally planned.

I think the answer pretty clearly is we would be better off regarding unemployment then we are now. I suspect, however, that many of the funds targeted for new jobs and infrastructure repair went to the states to avoid governmental layoffs and to stimulus funding of Democratic pet programs, but I am not sure. It is quite difficult to get good information about what happened to the infrastructure rebuilding program. But as Peter Morici reports, now only about $100 billion of the $759 billion stimulus package is slated for brick and mortar programs. Infastructure rebuilding is not only proceeding too slowing, it has been largely gutted by the Administration.

Assuming the moneys were as much diverted as not into tax cuts and aspects of the Democratic agenda, it seems that the federal government made a pretty big mistake here.   If I had known more conclusively, I would have included this error of the Administration in my recent article on Washington’s Problem is Poor Economic Solutions.  But the water is a bit muddy. What is clear is the infrastructure rebuilding program too largely went nowhere and we have high and rising unemployment.

But the next question is, is it too late?

That is, is the economy too much on an upswing and mending to get such a WPA infrastructure rebuilding program and funding for it on its feet in time to be really useful? The answer largely depends, I think, on one´s assessment of where the economy is going with unemployment and what the worth of a repaired infrastructure and some clean up is.  

The stock market now clearly thinks the economy is on the mend. Many here at Seeking Alpha have serious longer run reservations. Many economists and others believe the unemployment problem is going to last for a good while; some think a large part of it is permanent. Paul Krugman, himself quite an optimist, apparently has his doubts about employment improving quickly, too. So does Brad DeLong.

Such a program is certainly the most direct way to attack unemployment; however, as I pointed out in my article above, indirection and obliqueness have been the government´s big problems in trying to solve the nation’s economic problems. The proposal here would fix that regarding unemployment.

But what should we do now?

I think we should initiate a WPA type of program now and take people off the unemployment rolls and put them for starters on the “shovel ready” projects in their areas that never really got started. Also, much general repair and clean up is needed in America that they could also start on. Taxpayers would get something local and tangible for their money, for a change.

The infrastructure clearly needs help, some $2.5 trillion in maintenance, repairs and rebuilding according to the Americans Society of Civil Engineers. The expense of those unmade repairs and lack of maintenance grows annually with further physical deterioration. Basic maintenance is lacking in too many areas. It will cost us much more later. We are digging ourselves into a hole here. The program suggested should help. We would not be having people dig holes and then refill them.  There is honest work to be done.

If it turns out that the economy recovers more quickly, fine; continue with the program anyway. We need it.  If the economy has a relapse, then we should be glad to have the program in place and we can expand it. Unemployment is forecast to continue for a good while anyway. The repairs are badly needed. We should get on with it.

These suggestions are better than simply giving the money away in unemployment benefits and planning a new stimulus program that has only temporary effects and costs too much. Much useful can be done in almost all areas, down to picking up the trash strewn about America. Too, it would not cost us $92,000 to $257,000 per job, as some have variously estimated the last stimulus program cost us -- the price of Washington's economic indirection and obliqueness, I contend.

I also believe that such a program, in addition to impacting the unemployment problem, could seriously improve our nation’s spirit and outlook. Something tangible would be getting done. People who had no work, would be usefully employed. Bridges in shambles and roads badly pocked would be getting fixed and repaired. Things would get cleaned up and look better. People would notice. It would do us good and it would be useful.

We should have implemented such a program at the outset, but it is not too late. We should do it now.

Disclosures: none