Why Not Infrastructure?

by Cheryl Rofer

Reader MC has a suggestion for an alternative way to fix the US economy:

What would happen if the US took the $700B and invested entirely in upgrading the US infrastructure – new energy grid, new mass transportation infrastructure, upgrade schools infrastructure, new bridges, new water systems, faster hazardous waste clean-up, improve waterways, improve national parks and beaches, create national recycling program, and so on?

In 2005 , the American Society for Civil Engineering gave America’s infrastructure a cumulative GPA of a D for maintaining its infrastructure with a price tag of $1.6T to fix it all.

So, rather than the US government give this money to the banks in a last minute effort to repair a complicated web, the US government holds on to the money and invests it immediately into projects that directly create jobs and improve the infrastructure of the US, which will lead to more business opportunities - rather than wait for some abstract trickle around effect that will most likely lead to a new bubble within the financial community.

She'd like to know what our commenters think.

James K. Galbraith has a similar idea. He proposes stabilizing the financial system through the banks and the FDIC, but

With this solution, the systemic financial threat should go away. Does that mean the economy would quickly recover? No. Sadly, it does not. Two vast economic problems will confront the next president immediately. First, the underlying housing crisis: There are too many houses out there, too many vacant or unsold, too many homeowners underwater...it could be resolved in three years, rather than 10, by a new Home Owners Loan Corp., which would rewrite mortgages, manage rental conversions and decide when vacant, degraded properties should be demolished. Set it up like a draft board in each community, under federal guidelines, and get to work.

And then Galbraith proposes:

States and localities should get the funds to plug their revenue gaps and maintain real public spending, per capita, for the next three to five years. Also, enact the National Infrastructure Bank, making bond revenue available in a revolving fund for capital improvements. There is work to do. There are people to do it. Bring them together. What could be easier or more sensible?

Making MC's proposal part of the recovery plan.

Phila has a similar suggestion: renew the Civilian Conservation Corps. He's recycling it from the last presidential campaign.