Stimulus Spending for Transportation at a Snail’s Pace

From here:

Stimulus spending on transportation projects is expected to account for more than half the 3.5 million jobs the Obama administration says the stimulus will create or save. So far, only 7 percent of transportation stimulus funds have been paid out. (Snail image from Jürgen Schoner/Wikipedia Commons)

Stimulus money for transportation projects is being spent far more slowly than expected.

When the economic stimulus act passed in February, the nonpartisan Congressional Budget Office estimated [1] that the U.S. Department of Transportation would spend about $5 billion by the end of the fiscal year, which was Wednesday.

But Transportation Secretary Ray LaHood said Thursday that only $3.4 billion has been spent [2] so far – about a third less than forecast. Rep. John Mica, the top Republican on the House transportation committee, said the spending rate was disappointing, noting that unemployment figures released today were expected to hit 9.8 percent [3].

I predicted this from the start, in December of last year:

But this road–and I’m going to concentrate on the transportation infrastructure–is longer than it looks.

  • The general financial situation of the Federal government, coupled with that of the states, will make allocating funds to this difficult, even in a “stimulus mode.”  The general trend in American governmental budget allocation has been towards entitlements, and reversing that habit won’t be easy.  For the most part the states don’t have the option of deficit spending.
  • All transportation infrastructure projects have an environmental impact, and getting through both the regulatory maze and the political opposition of the environmentalists will be time consuming.  I discussed this during the campaign.
  • Most state DOT’s have projects “on the shelf” ready to go for Federal funding.  But there will be a delay in finalising the designs and getting through aforementioned regulatory processes.
  • If he tries to push too hard, the waste of money will increase.  Any time a large flow of money comes from the government all at once, oversight deteriorates and more money ends up in places it wasn’t intended to.  The financial bailout is a good example of this.
  • The construction industry will be delighted with the increase in activity.  But expanding the labour force will take time.  In the 1930’s when FDR and Huey Long were out expanding the infrastructure, much construction labour was unskilled and people with no prior experience could be absorbed into the workforce much for easily.  On today’s techno-mechanised, safety conscious job site, people (especially in the heavy construction segment, which builds transportation projects) needs to be trained and know what they’re doing.  And that, with the native labour force, is easier said than done.

Although upgrading our infrastructure is badly overdue, it’s not a quick road to reinflating our economy.  And in a political system notoriously short of patience, Barack Obama will discover that his electorate will become restless very quickly.

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