Why the U.S. Stimulus Legislation has not Worked as Yet

Bob Herbert published an Op-Ed piece in the Saturday, July 11 New York Times entitled “The Human Equation,” in which he takes the Obama administration to task for not being more aggressive in addressing the unemployment crisis in this country. He says:

“I’d like to see the president go on television and, in a dramatic demonstration of real leadership, announce a plan geared toward increasing employment that is both big and visionary – something on the scale of the Manhattan Project, or the interstate highway program, or the Apollo spaceflight initiative.”

He goes to propose a “Rebuild America” campaign to put people to work rebuilding infrastructure, including roads, schools, electric power grids, and mass transportation.

I agree completely with his sentiment, but he and others who propose similarly ambitious initiatives never understand why these kinds of initiatives seem beyond our reach today. Even if we had the money for them, which we do not today, achieving their goals would be virtually impossible because of policies and practices we have put into place in the last 40-50 years:

• We have given individuals and interest groups far more power to stop and slow big projects than was the case when we built the interstate highway system. Aside from laws mandating environmental impact statements, protection of endangered species, protection of people with disabilities, rights of people affected to have notice and hearings, and reviews by metropolitan planning organizations, we have also put into place processes to protect against unfair and uncompetitive contracting. While individually these rights are necessary, we must recognize that their cumulative effect is to make it difficult to get anything done, and, when anything does get done, its cost balloons out of sight. For example, as Alan Altshuler and David Luberoff point out in their book Mega-Projects: The Changing Politics of Urban Public Investment, the infamous “Big Dig” project in Boston was estimated to cost $5 billion, but cost in excess of $16 billion. Over 1,700 special agreements had to reached with home and business owners and other interest groups to get the project done.
• We have added too many unrelated goals to the completion of infrastructure projects, all of which add cost and time to the project. Two years ago, when I was invited to speak at the ground-breaking ceremony for the $80 million Urban Transitway project in Stamford, Connecticut, I was introduced to the U.S. Department of Transportation official responsible for diversity in contracting and employment. He had a large and bewildering array of responsibilities mandated by federal law and executive order to enforce. Additionally, the project was subject to prevailing wage regulations and a wide range of other non-transportation-related rules. Again, I do not question the broad direction of these goals, or even whether they are appropriately applied to infrastructure projects, but let’s remember that they add cost and time to getting projects done, and almost none of these were in place 40-50 years ago.
• Unfortunately, there are a lot of “hands in the till” between the time projects are begun and when they are completed. We have this idealized image of modern-day infrastructure projects that take unemployed people and put them to work within a few months after the project is commenced. The reality is quite different. There is some period of time in which currently employed government professionals have to work through mandated review processes. Then, highly-paid outside engineering and construction firms get involved for design. After that, well-paid planning and government affairs consultants and lawyers get involved. Each of these groups takes their toll charge on a project for a long time before any unemployed person has the potential to get employed. In some communities, the work may not even get done by unemployed local residents. Some years ago, I visited with the head of a community development group in a depressed major city, who had put local residents to work on small construction projects. He said his biggest adversary was the mayor, who was upset that the community development organization did not funnel work to the mayor’s friends and political contributors. He said that, on other projects, work got diverted away from the unemployed to outside, but politically-connected firms.

As a society, we have to decide whether government exists to serve its citizens or to be a conduit for money from its citizens to resourceful and politically well-connected special interests, whether they be state employees, politically powerful contractors, lawyers, lobbyists, government affairs consultants, or engineering and design firms. It’s nice to contemplate an idealized world in which none of these factors play a role, but it’s not the world we live in today, and it won’t be the world our children live in unless we do something about it.