President Barack Obama, as part of Stimulus 2.0, which will also include targeted and temporary tax cuts, is going to propose $50 billion in new infrastructure spending. That means roads, bridges, railroads, and airports.
The failure of a nearly $900 billion-stimulus package, which allegedly also included building roads, bridges, railroads, and airports, to jump start the economy has left President Obama and congressional Democrats who passed the legislation with a problem. The American people are not only enraged at all of the wasteful spending, but are also enraged that it seems to have done nothing to create jobs or spur economic growth.
The failure of Stimulus 1.0 to do anything suggests that, by trying to do the same thing, albeit on a smaller, more targeted scale, President Obama is behaving like the drunk who, after waking up from a bender with a pounding headache and an upset stomach, reaches for the hair of the dog in the form of more whiskey.
In theory, infrastructure spending should produce some stimulative effect beyond the jobs created, which go away after the ribbon-cutting ceremony. The ability to move goods and people around more easily and quickly should help the economy.
But there are three problems.
First, any economic effects of new and improved infrastructure tend to happen in the long term, rather than immediately. That means that President Obama’s Stimulus 2.0 is not going to save the Democrats from the thumping that is in store for them this November. It will likely not even be of help for Obama himself in 2012.
The second problem is that this kind of stimulus infrastructure funding tends to be grabbed by politicians in Congress for projects that, while they might benefit their constituents, may not make economic sense. Hence the infamous “bridge to nowhere.”
The last problem is that the American people are likely to look upon this with a mixture of anger and bemusement. Stimulus 1.0 was such an epic fail that one might reasonably assume the President of the United States might learn from that failure and attempt another approach. Like across the board tax cuts or lifting restrictions on oil drilling.
But President Obama is proving the old adage that the definition of insanity is attempting to do the same thing over and over again, hoping each time for a different result. It is as if, having failed to jump start the economy the first time, Obama has concluded that the economy was just not paying attention and needs more jolting until it does. The problem is that it is Obama who is not paying attention. But rest assure, his jolt is coming.
Sources: Obama to Seek New Stimulus Package, Focusing on Tax Cuts, Mark R. Whittington, Associated Content, September 5th, 2010
Obama unveils huge jobs and infrastructure plan, AFP, September 6th, 2010