Project Would Be the Largest Since the Interstate System
On the heels of more grim unemployment news, President-elect Barack Obama yesterday offered the first glimpse of what would be the largest public works program since President Dwight D. Eisenhower created the federal interstate system in the 1950s.
Obama said the massive government spending program he proposes to lift the country out of economic recession will include a renewed effort to make public buildings energy-efficient, rebuild the nation’s highways, renovate aging schools and install computers in classrooms, extend high-speed Internet to underserved areas and modernize hospitals by giving them access to electronic medical records.
“We need to act with the urgency this moment demands to save or create at least 2 1/2 million jobs so that the nearly 2 million Americans who’ve lost them know that they have a future,” Obama said in his weekly address, broadcast on the radio and the Internet.
Obama offered few details and no cost estimate for the investment in public infrastructure. But it is intended to be part of a broader effort to stimulate economic activity that will also include tax cuts for middle-class Americans and direct aid to state governments to forestall layoffs as programs shrink.
House Speaker Nancy Pelosi (D-Calif.) has called for spending between $400 billion and $500 billion on the overall package. Some Senate Democrats and other economists have suggested spending even more — potentially $1 trillion — in the hope of jolting the economy into shape more quickly.
On Friday, the government reported that 533,000 jobs were eliminated in November, the largest one-month drop since 1974, raising unemployment to 6.7 percent. And last week, the National Bureau of Economic Research officially declared that the country has been in a recession since last December.
“We have faced difficult times before, times when our economic destiny seemed to be slipping out of our hands,” Obama said. “And at each moment, we have risen to meet the challenge, as one people united by a sense of common purpose. And I know that Americans can rise to the moment once again.”
Governors praised Obama’s proposals, saying their states stand ready with billions of dollars’ worth of road and school projects that could be started quickly with an infusion of federal cash. At a meeting with Obama in Philadelphia last week, governors estimated that there are $136 billion worth of projects that are “ready to go” once money rolls in.
“Here in Virginia, we have more than a billion dollars in ready-to-go bridge, highway, rail, transit, port and airport projects that have been through appropriate local, regional and state planning processes and that can be under contract within 180 days,” Gov. Timothy M. Kaine (D) said in a statement.
Maryland Gov. Martin O’Malley (D) said the plan would “help keep people employed and create new jobs, [and] it would allow us to deliver infrastructure improvements that will last beyond the immediate economic crisis and benefit generations to come.”
In keeping with the secrecy that surrounds the development of his recovery plan, Obama has given the governors no commitment about how much money they would receive for such projects. But Pennsylvania Gov. Edward G. Rendell (D), chairman of the National Governors Association, said yesterday that he is not worried.
“Is it going to be big or little? It’s going to be big,” Rendell said. “I have no doubt that it’s going to be substantial. [Obama] didn’t blink an eye when we talked about $136 billion.”
Obama’s top economic advisers are working with congressional leaders, who say they would like to have legislation ready for the new president to sign on Inauguration Day, Jan. 20. But congressional sources expressed skepticism yesterday that a program of such size and scope could be passed in the two weeks after Congress returns to Washington on Jan. 6.
“That is our goal,” said one House leadership aide. “The problem is reality.”
Republicans in the House oppose Obama’s plan, saying they favor a series of tax cuts that they say would put money in people’s pockets and encourage businesses to expand domestically.
“Anyone who has talked to the American people knows that while they are hurting, they don’t believe that more Washington spending is the answer,” said Michael Steel, a spokesman for Minority Leader John A. Boehner (R-Ohio).
Democrats said that even if a recovery act quickly passed the House early next year, it could take longer in the Senate, where fiscally conservative Republicans have expressed concern about adding to the soaring deficit with a massive new round of government spending. Even with at least 58 Democratic votes in the new Senate, Republicans could easily hold up a final vote, they said.
“Under the timelines being discussed, the only way we can get something done is with the cooperation of Republicans,” a senior Senate Democrat said. “The dynamic hasn’t changed.”
Aides in both chambers said the timing of the legislation will depend on the details of what is likely to be a very complicated proposal.
“He is now just beginning to flesh out his ideas,” the Senate Democrat said. “Despite some of the reporting that we’re on the cusp of some agreement, that ain’t true. There are not a lot of details yet.”
In his address, Obama offered the first outline of how he wants to direct the public works spending.
The largest share would go to roads and bridges and could be used to accelerate long-delayed repairs and expansions. Responding to concerns that new transportation money might be caught up in red tape at the state level, Obama said states must quickly invest in road and bridge construction and repair or lose the federal dollars.
” ‘Use it or lose it’ is a very powerful tool for us,” Rendell said yesterday.
Obama would also direct a “massive effort” to make federal buildings energy-efficient by replacing aging heating systems and installing efficient light bulbs. Obama said the effort to “green” the federal government would save taxpayers billions.
Much of the public works program would be aimed at improving technology. The government would pay for new computers in schools, new medical technology in hospitals and doctors’ offices, and a nationwide push to bring broadband to parts of the country that cannot yet access the Internet at high speeds.
Calling it “unacceptable” that the United States ranks 15th globally in high-speed-Internet adoption, Obama said in his address that “every child should have the chance to get online.”
Mark Zandi, chief economist for Moody’s Economy.com, said the kind of infrastructure spending Obama has proposed “makes perfect sense” for an economy that is likely to be struggling for years.
But he said the projects must be married with the tax breaks and aid to states, which would spark more economic activity quickly.
In a scenario he has presented to governors and congressional committees, Zandi estimated that a $600 billion stimulus package similar to the one Obama has proposed could bring the unemployment rate back to 5 percent by 2012.
“There’s been a lot of thought put into economic recovery, stimulus,” he said. “The fact that the economy is rapidly eroding provides a strong impetus to get something done quickly.”