Commentary | Economic Growth

Senate compromise on stimulus flunks economics test

The bipartisan amendment to the Senate recovery plan eliminates several of the best targeted, most stimulative provisions in the bill. Nothing is more important at a time of cascading job losses than to help states avoid the need to lay off employees as a way to balance their budgets.  As Benjamin Franklin would have said, a job saved is a job created.  Yet the Nelson-Collins amendment cuts $40 billion in aid to the states – immediate assistance to prevent service cuts and layoffs that would accelerate the vicious circle of job loss, consumer weakness, business cuts, and more layoffs.  Did they miss the news that 2 million jobs have been lost in the last four months?

I trust that the nation’s governors will intervene forcefully and persuade the House to resist this unexplainable mistake.  But I worry about another, equally wrongheaded cut that might not have sufficiently powerful opponents.  The amendment completely eliminated the Senate bill’s $16 billion for K-12 school repair and modernization, along with another $3.5 billion for higher education school construction.

By every definition, the school construction money is perfect stimulus.  It’s targeted: there is an enormous backlog of ready-to-go repair projects in every state, a backlog so big it would take 8 to 10 years to address at $16 billion a year, according to various studies by the Government Accountability Office, the National Education Association and the National Center for Education Statistics.  It’s timely: the spending can happen in a matter of months, most obviously when the kids leave schools empty in June for summer vacation.  New York City alone has more than one billion dollars of deferred maintenance it’s ready to tackle if funds are provided.  States and school districts from Oregon to New Jersey have been preparing project lists for months.  And it’s temporary: however much a permanent program is called for, this is a one-time grant of funds for a burst of badly needed repairs.

The workforce is ready and available: more than one million construction workers have been laid off in the last 12 months, and many of the firms that could do this work are small, local businesses with all of the skills needed for roof repairs, window replacement, plumbing, boiler and A/C upgrades and the other kinds of maintenance projects that are critical for the safety and comfort of teachers and students.  Studies show what common sense might suggest: student achievement improves with better lighting, adequate heating and cooling, and roofs that don’t leak.  This school construction money would be a win-win-win in terms of jobs, education and energy efficiency.  By even the most conservative estimates it would create about 150,000 jobs. Moreover, these jobs will be generated all over the country and will create jobs far beyond construction. For every two construction jobs created there is a job created in industries which supply inputs into the building/repair process. And when these jobs are created, those who are newly employed spend their salaries, thereby giving a boost to many other sectors and more than doubling the total job impact.

Truly, it’s hard to imagine what Sens. Nelson and Collins were thinking when they made this cut.  They’ve flunked this test, but with a little tutoring from Nancy Pelosi and her colleagues in the House, they might do better on a make-up.

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