May 2018 Vol 73 No. 5

Editor's Log

2009 Stimulus Lessons and Infrastructure Investment

by Robert Carpenter Editor-in-Chief

Early proposals for high-dollar infrastructure investment has created a unique buzz of excitement not heard since the much ballyhooed stimulus of 2009.

Then, a President Obama-sponsored $800 billion stimulus package was passed. While there was much ado about aiding infrastructure, the final dollar investment (including roads, bridges, airports, water/sewer and telecom) was only a fraction of the total spending package and not the significant boost for which we were hoping. Little was accomplished that addressed our nation’s serious long-term infrastructure problems.
Our economic situation was much different in 2009. The U.S. economy had stumbled into a deep recession. Unemployment was a major issue, having swelled to over 10 percent. Today, we have the opposite problem with a severe shortfall of skilled and unskilled labor across a broad swath of markets – but especially in the utility and pipeline industries.

In 2009, we simply needed to get the economy working again. The spending package was designed as a broad brush approach to anything and everything, ranging from state welfare aid to parks improvement to painting roofs. Famously, billions were spent on the electric car market with the goal of having one million units on the road by 2015. In 2017, the electric car industry was elated to have sold almost 200,000 units. I think they’ll hit their goal – someday.

One of my favorite infrastructure investments has been almost $60,000 a year to haul horse manure off public lands. That contract is due to expire in 2019.

Underground markets such as energy pipelines, gas distribution and telecommunications have prospered since 2009 but that had nothing to do with a stimulus investment. The market dynamics for these industries exploded into prosperity based upon natural causes – not artificially boosted via a stimulus. On the other hand, sewer, water and stormwater have continued their economic malaise, often waiting until systems fail before taking action. Or worse, an EPA Consent Decree is implemented.

There are many lessons and other variations from the 2009 stimulus that must be pondered if the major money infusion actually occurs in the next year or two. President Trump has pledged a $1 trillion investment in infrastructure. Assuming the sewer/water/stormwater markets, along with rural telecom and electric, get their fair share of available investment dollars, a true jumpstart to repairing and updating underground infrastructure could be unveiled.

Of course, the $1 trillion number is misleading in that it is not a straight cash infusion from Congress. Trump’s plan called for a combination of federal/state/local dollars combined with private investment to reach the goal. To make that investment target, Congress will probably delve out federal dollars through a series of bills designed to interact with local and private entities which would complete the funding puzzle.
The buzz phrase of the 2009 stimulus bill was “shovel-ready projects.” These were to be the backbone of the program with projects to be underway within a couple of months of receiving funding. Or so the vision predicted.

The reality was much different. For major infrastructure projects, it generally takes years for such programs to be approved – a tribute to our regulatory-burdened, bureaucracy-laden society. Even President Obama later admitted he misspoke. There is “no such thing as shovel-ready projects” he told a news agency in 2010.  Love him or hate him, give President Trump credit for steadily going about trying to dismantle many of the federal governments onerous rules and regulations, especially those impacting private business. But as much as he’s done, so much more is needed. The permitting processes need to be streamlined so funds can be immediately implemented.

Another lesson learned from the 2009 stimulus was that the federal officials brought projects to a  standstill by applying new rules regarding prevailing wages. Can the Trump Administration successfully side step that inhibitor as well?

Hopefully, the definition and intent of the current funding proposal will remain true to its course through the Congressional drafting and tinkering cycle. Can the federal/state/local agencies assign and leverage their funding in such a way as to attract matching private investment?
Even more important, can the bureaucracy get out of the way and let free enterprise do what it does best?

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