Deficit Reduction Alone Will Not Do For America – Need to Have Real Stimulus – Infrastructure Maintenance Would Do A Lot of Good

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By Paolo von Schirach

June 30, 2011

WASHINGTON – David Wessel points out in The Wall Street Journal, (Prescriptions to Revive Recovery, June 30, 2011), that the US economy needs both a believable deficit and debt reduction plan and an energizing growth strategy. While deficit reduction –which has to imply serious spending reduction– is essential, he writes, that alone will not restore growth. We still need to find ways to kick-start the economy.

Deficit reduction, good stimulus

Can America do both at the same time? Can the Congress and the President agree on a credible plan that will reverse the dangerous upward spending trend? Can Washington convince America and the world that this time we are serious? So far, not so good. The persistent stalemate on a debt raising deal that would include spending cuts does not augur well.

But, even assuming success, while cutting spending, can Washington also provide meaningful incentives for investments and growth? Doing all of this at the same time may be too much for a brittle US political system that seems to be paralized by deological stands, whereby compromise is considered capitulation and thus political ruin.

Infrastructure maintenance

Still, within the to do list provided by Wessel at least one item should be non controversial: infrastructure maintenance, as opposed to brand new infrastructure projects. New projects are unfortunately very political. Where do we build this highway? Close to your city? No better close to mine. You need an airport expansion? No, I need it more. You get the point.

But taking care of routine maintenance of our vast and often dilapidated infrastructure stock would be far less controversial. There are mountains of studies, audits and analyses pointing out the horrible state of disrepair of highways, bridges and more in America, due to decades of underinvestment. The needs are enormous and they are spread around the entire country.

Stimulate the economy, while implementing badly overdue projects

One way to provide good stimulus would be to launch a substantial highway repairs program, focusing on mundane but necessary tasks. In most cases, this would not require new studies, or complicated approval or vetting processes. This is about funding deferred routine maintenance and urgent repairs.

In so doing, Washington would give a boost to the construction industry, create demand for labor, equipment and supplies in order to perform work that is already overdue and that sooner or later will have to be done.

This is not a cure all. But it would help out of work construction workers, while re-energizing a depressed sector. There may be some work in putting together an inventory of projects, while trying to prioritize the most urgent interventions. But this could be left to states and localities. Washington would provide the cash.

For those who object because any new spending would add to the deficit, the answer is that without reliable highways, bridges, ports and airports, pretty soon there will be no America. This should be spending that we could all agree upon.

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