‘The Stimulus Impact May Be Short-Lived’

Columnist Liz Peek rightly states that rebate checks might be the silver bullet to pull us out of the economic downturn, but only for the next two quarters [Business, “The Stimulus Impact May Be Short-Lived,” May 6, 2008].

She goes on to ask the logical, if often unexplored, follow-up question: What next?

Even before the credit crisis, economists at the New School’s Schwartz Center for Economic Policy Analysis released data that makes clear the long-term benefits of public investment in our national infrastructure.

The levees in New Orleans and the I-35W bridge in Minneapolis testify to the urgent need.

The current economy only makes this argument stronger.

I give you two statistics presented in our forthcoming publication, “The Promise of Public Investment”:

— Tax rebates are expected to generate only about $0.67 of domestic demand per dollar; in contrast, infrastructure spending would produce nearly 10 times as much, some $6.20 per dollar.

— The Federal Highway Administration states that every $1 billion of infrastructure investment creates 42,100 jobs, both directly and indirectly, that cannot be outsourced.

Let’s be pragmatists and use the short-term, rebate check boost to advance a long-term solution.

Washington’s on-again, off-again debate on economic stimulus has at each turn included discussion of infrastructure investment a valid option.

There are currently four pieces of legislation on the table in Congress that would create a funding mechanism for such a program and plenty of projects, designed and approved, waiting in the pipeline.

BOB KERREY
President
The New School
New York, N.Y.