Gary Johnson sure had the hit of the night at last night’s Republican presidential debate in Florida with
his Rush Limbaugh’s shovel-ready jobs joke.
This is not news to Obama though. In October, 2010, Obama, interviewed by the NYT’s Peter Baker, in an article entitled, “Education of a President,” confessed one thought of the shovel-ready jobs so touted by his administration: “He realized too late that ‘there’s no such thing as shovel-ready projects’ when it comes to public works.” Too late, indeed.
Keynesian economics posits that increases in government spending can create or keep jobs by increasing GDP during recessions by compensating for decreased consumption. If the people are not spending and consuming, the government will temporarily pick up the slack. One of the caveats, however, is that such stimulus works only in the short-run. (In the long-run it leads to inflation, which is why governments cannot forever run deficits.)
It comes as a surprise only to a politician who specialized in free lunches that major construction projects take years to design, plan, and build. Even those that are shovel-ready – the design and planning has already been completed – will take years to be finished. If Keynesian economics calls for large injections of cash via government spending now, why spend the money over a number of years? Even if all of the money is given today to a construction company, they will spend that money buying the supplies and paying the wages over the lifespan of the project, not all at one time. Such spending will have a “multiplier” effect if spent quickly. As CBS reported after the NYT interview:
When the president campaigned for the stimulus package at the start of his presidency, he and others in his administration repeatedly insisted the investments would go to “shovel ready” projects — projects that would put people to work right away. As recently as [August, 2010], however, local governments were still facing delays spending the money they were allocated from the stimulus.
As part of his most $447 billion American Jobs Act, President Obama has shown he hasn’t learned the lesson after all. Yesterday he traveled to the Brent Spencer Bridge – which connects the home states of House Speaker John Boehner (R-Ohio) and Senate Minority Leader Mitch McConnell (R-Ky.) – to argue for more stimulus funds for such construction projects.
“There’s no reason for Republicans in Congress to stand in the way of more construction projects. There’s no reason to stand in the way of more jobs,” the president said as he stood before the Brent Spence Bridge linking Ohio and Kentucky. “Mr. Boehner, Mr. McConnell, help us rebuild this bridge. Help us rebuild America. Help us put this country back to work. Pass this jobs bill right away!”
McConnell, predictably, dismissed the speech as “political theater.” But the politics – and economics – aside, Obama picked a non-shovel-needing bridge next to a non-shovel-ready project as his backdrop. John Merline of IBD reports:
Although some press accounts have described Brent Spence as “crumbling,” and the White House says it’s an example of “urgently needed” repairs, the bridge isn’t falling apart. In fact, it’s designed to last for decades more.
It is, however, “functionally obsolete,” which in this case means it’s too small to handle the daily traffic load. While designed to handle 85,000 cars and trucks, it now carries more than 150,000, leading to regular backups.
So the plan isn’t to do extensive repairs on the bridge, but to build an entirely new one right next to it and keep the old one in use.
The problem is that construction work on the $2.3 billion bridge isn’t scheduled to start for three or four years, according to the project’s official website.
That would appear to put it outside the “immediate” timetable in Obama’s jobs bill, which requires the Transportation secretary to “obligate” all the highway funds “not later than two years after enactment” of the bill.
The bridge failed to get any money from the previous $830 billion stimulus because it wasn’t a “shovel ready” project.
Some think it’s possible the jobs bill money could still be spent after two years, which nevertheless wouldn’t mean much for job seekers today. The Department of Transportation didn’t respond to requests for comment.