The Shovel-Ready Jobs Swindle | Citizens Against Government Waste

The Shovel-Ready Jobs Swindle

The WasteWatcher

Despite the miserable results from the $48 billion spent on infrastructure in the $787 billion American Reinvestment and Recovery Act, President Obama’s recently-proposed American Jobs Act includes $50 billion for new infrastructure projects to be funded through the creation of a government-run infrastructure bank. The President is touting this $50 billion expenditure as a way to immediately put thousands of Americans back to work; however, infrastructure experts are skeptical that the money will produce the short-term unemployment fix that the president is promising.

Harvard economist Martin Feldstein calculated that each job created by President Obama’s American Jobs Act would cost taxpayers $200,000. When asked about this statistic in a September 26, 2011 interview with ABC News, Treasury Secretary Timothy Geithner did not dispute the figure, and added, “the pricetag is the wrong way to measure the bill’s worth.”

The money would be spent on a variety of infrastructure projects, such as improved highways, railways, and transit systems. The national infrastructure bank, according to Rep. Rosa DeLauro (D-Conn.), would end up functioning as a “public private partnership like Fannie Mae.” Such a comparison should give taxpayers heartburn.

While the goal of putting Americans back to work as quickly as possible is commendable, experts note that factors such as extensive permitting, environmental hurdles, public hearings, and land acquisition often result in even the simplest of projects taking multiple years to get started. William Ibbs, a professor of civil engineering at the University of California at Berkley, was quoted in a September 26, 2011 Politico article saying, “As a rule of thumb, you’re looking at three years for a project, really going from the time the federal government says we have the money and want to spend it…The politicians really don’t understand how cumbersome the process is these days. Environmental permitting, especially on road projects can take years. You’re hiring attorneys, not really shoveling a lot of dirt.”

There is little evidence for any correlation between infrastructure spending and short-term job growth. Analysis of the economy 10 months into President Obama’s first economic stimulus plan, cited in a January 12, 2010 Associated Press article, found that, “A federal spending surge of more than $20 billion for roads and bridges in President Obama’s first stimulus has had no effect on local unemployment rates…, it didn’t matter if a lot of money was spent on highways or none at all: Local unemployment rates rose and fell regardless. And the stimulus spending only barely helped the beleaguered construction industry.”

When questioned at a June 13, 2011 meeting with his Council on Jobs and Competitiveness about the tortuous permitting process for construction projects, President Obama quipped, “Shovel-ready wasn’t as…uh…shovel-ready as we thought.” While this explanation might satisfy a room full of friendly supporters, it is doubtful that the millions of jobless across the nation are finding much to laugh about in this dismal economy.

With an extensive track record of failed Keynesian economic policies, it is time for the Obama administration to make a U-turn. The federal government should lower corporate taxes and remove the massive regulatory burden on businesses, which would increase certainty and inspire the private sector to begin hiring. With a national unemployment rate of 9.1 percent, Americans are in need of jobs now – not multiple years down the road.

  -- PJ Austin