A Taxing Ordeal
In last week’s State of the Union speech, President Obama called for a boost in infrastructure spending in order to create jobs and improve the economy. But his fantasies will meet with some significant hurdles. In fact, he’s up against a brick wall and he probably knows it.
In his address the president outlined a six-year program to repair roads, bridges and the nation’s transportation systems which, he suggested will be backed by a national infrastructure bank to leverage private funding.
He also suggested more government spending to build intercity passenger rail lines, as well as what he called a “national wireless initiative” to provide internet access to a majority of American homes.
The source to fund those projects? Who knows? Except for a proposal by the president last September for $ 50 billion in infrastructure spending this year, not much has been said about allocating money for highway projects, and proposed hikes in gasoline taxes have met with repeated resistance in both houses. As an afterthought, the president felt that eliminating tax breaks for oil companies could pay for his proposal, but he had nothing to say about the effect those “tax breaks” would have at the gas pumps.
The Senate is debating a multi-year highway bill that supposedly will provide the framework for the president’s plans, and that might encourage some of the voters, but without a doubt that “framework” will also eat into the budgets of any American still lucky enough to have a budget.
The president’s entire speech was spinnage. He was proposing the same kind of WPA planning that the government tried out during the first Great Depression. That kind of strategy didn’t work because it couldn’t work, and those in Washington – at least the few who are doing what they’re being paid to do – know that all that flamboyance and arm-waving on “the Hill” are just exercises in futility. It’s all showmanship.
Except for the sacrosanct Department of “Defense” – and the lawmakers themselves, of course – everyone will be forced to bite the bullet. We’re broke. Even Mr. Geithner went so far as to admit that the country is bankrupt. So, how will we finance those WPA programs without money? We’ll just have to print some. It’ll be funny money, to be sure, but it’ll buy time. A small amount of it.
If our lawmakers knew anything at all about the Multiplier Effect, they’d be off on a different tack. They’d know that building unnecessary roads and bridges for our broken economy served no useful purpose in the 1930s. It was a waste of time and only added to our nation’s deficit. No profits and no jobs were generated by those unused structures. Immovable statues generated as much income.
And the jobs? All temporary. When those roads and bridges were finished, the jobs were, too. Some of us remember that. We also remember the steps taken by FDR to create profitable, enduring, depression-ending employment. He revitalized our shipyards. Read about it. It’s in history books.