Economic Snapshot for February 4, 2009

Recovery package falls short of infrastructure needs

by Ethan Pollack

There has been much debate recently about the infrastructure spending provisions of economic recovery proposals, which some policy makers would rather replace with tax cuts. This is a bad idea—as we have previously written, it is widely recognized that infrastructure spending provides about 25-50% greater boost to the economy. ¹

A new report by The American Society of Civil Engineers argues that even the infrastructure investment contained in current stimulus proposals falls far short of what is needed to raise the nation’s infrastructure to “good” condition. Assuming government investment on infrastructure remains constant, the report found that the recovery package as passed by the House of Representatives only covers about 8% of the five-year infrastructure investment gap, and that an additional $1.1 trillion is needed (see Figure).²

We should not allow our children and grandchildren to be saddled with the burdens of a crumbling and outdated infrastructure. The recovery package should include more infrastructure investment, not less.

Notes
1. Pollack, Ethan. 2008.  “A Meaningful Stimulus for Main Street.” Washington, D.C.: Economic Policy Institute.
http://www.epi.org/economic_snapshots/entry/webfeatures_snapshots_20081022/

2. The report found that $2.2 trillion in total infrastructure investment would be needed over five years. Assuming $903 billion in baseline spending, the American Recovery and Reinvestment Act (H.R. 1) provides only 8%—or $101.35 billion—of the remaining $1.21 trillion investment gap. If stimulus passes, an additional $1.11 trillion will still be needed.