Obama's Economic Stimulus

Welcome! This is the place to talk about the economy.

Let's get started. In his radio address today, Obama announced the key components of his economic stimulus plan. I am shocked. During the campaign, Obama and his team put together a sound economic plan. Take a look at the campaign web page. Many of these ideas could easily be turned into components of a real, workable, and immediate economic stimulus plan. He has good ideas. Yet, not one element in the details released today will provide any near-term economic relief. Here are his five key elements and my thoughts on each.

1.) Launch a massive effort to make public buildings more energy-efficient. Energy efficiency is an important goal. Changing the light bulbs in federal buildings won't save the economy. Replacing old heating systems might, but it takes years to plan and implement. It's seems like this was more important before the collapse of energy prices. Still, if the President Elect wants to promote energy efficiency and stimulate the economy, a federal tax credit on energy efficient home heating systems might work. By the way, this plan was first announced in August (see the bottom of page 7) as a small piece of the New Energy for America Plan.

2.) The single largest new investment in our national infrastructure since the creation of the federal highway system in the 1950s. I have to back off a little. This is real government spending and there is no question about the need to renovate our transportation infrastructure. And, some of this spending can be done quite quickly. Many states have projects on the books ready to go but "the single largest new investment ... since the federal highway system" will take time (years) to implement. How long does Obama think the recession is going to last? If the spending hits when the economy is trying to recover, it is much more likely to "crowd out" private investment than it is to boost the economy. If we rush the roads projects, they are much more likely to end up being roads to nowhere and we will end up crowding out good private investment with useless bridges. This plan is contained in the campaign web page (search for infrastructure). I liked the scale of the earlier plan better.

3.) The most sweeping effort to modernize and upgrade school buildings that this country has ever seen. Again, this is a good idea. Public schools across the country are falling apart. New schools need to be built and old schools need to be modernized. This is not a medium-term stimulus plan. Every issue with roads construction is doubled with school construction.

4.) We’ll also renew our information superhighway. I am not even going to comment. Connecting every library in the country to the Internet tomorrow is not going to create enough jobs to ever be noticed. I like the vision: It's not stimulus.

5.) Help modernize our health care system. This was one of the pet projects of the current administration. They failed. In the very long run, making the health care system more efficient is a great idea if it can be done. It will boost the economy and make every American better off -- in the very long run.

I don't think much of the details released so far. I hope the rest of the economic plan has a bit more substance to it. I don't mind spending federal tax dollars if there is at least a hope they might do some good. Spending money for the sake of doing something is a waste of time. And, using the economic crisis to push forward a favorite parts of an existing agenda may do some good (I like the policies) but it won't solve the crisis.