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Obamonomics—1930s Style



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Saturday’s video announcement that President-Elect Barrack Obama would unleash a massive spending plan to boost the economy wasn’t much of a surprise. True to form, he used grand images—“We need to act with the urgency this moment demands”—and he seemed to promise the federal government as savior to our economic ills.

Specifically, President-Elect Obama promised an infrastructure-spending program bigger than the investment in the federal Interstate Highway System. It is a proposal that is both grand in words and extraordinarily shallow in substance.

While we have been underfunding roads and highways to the tune of about $70 billion a year, depending on which estimates one uses, Obama’s emphasis on “ready to go” projects belies a naïve faith in government spending as a generator of jobs. Investments in infrastructure have to be the right kind, in the right place, at the right time to have meaningful impacts on long-term economic growth. Massive infusions of government cash in the current system likely will simply reinforce the status quo, dumping money into the current infrastructure black hole that might undermine long-term competitiveness as Adrian Moore and I discuss in our recent article in National Review (Dec. 15, 2008) as well as our new book, Mobility First: A New Vision for Transportation in a Globally Competitive 21st Century (Rowman & Littlefield, 2008).

Worse, Obama’s strategy of spreading federal largesse beyond roads to water and sewer systems, schools, and even extending broadband access is little more than a massive centralization and extension of federal authority over the national economy under the guise of an economic stimulus plan. The Obama stimulus package—likely to be more than $300 billion over two years—is old-style pump priming. Welcome back to the days of old-fashioned Keynesian economics.

Sam Staley is director of urban and land use policy at the Reason Foundation.



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