Monday, May 10, 2010

The Obama Infrastructure Plan, Year 2

On February 17th, 2009, President Obama countered the recession with his own economic stimulus plan: The American Recovery and Reinvestment Act (ARRA). Proponents of public transportation heralded the effort, which allocated over $48 billion of the $787 billion economic stimulus package towards infrastructure improvements.  These investments into our nation's infrastructure focused on of a range of transportation initiatives including highway, rail, air and maritime. When the Act was first unveiled, its primary goals were threefold: to rescue, recover and reinvest. Long term benefits were intended to materialize through improvements in the efficiency of transportation systems across America and increasing our economic viability internationally. More immediate goals of the plan primarily came down to creating jobs. The Obama administration cited the lofty but vague goal of creating ‘millions of jobs’, both direct and indirect. Due to the long-lead nature of construction projects, it was speculated that the bulk of new jobs wouldn't be created until mid-2010. As we're nearing that milestone, it seems an opportune time to reflect on what the large-scale infrastructure plan has and has not accomplished early in its sophomore year.

To start, let's talk money. How much of the money has been awarded? How many projects have received money and commenced construction? Within days of ARRA’s passage, money was being awarded. Within six months $33.2 billion had been awarded to states for proposed projects and of that, $20.6 billion had been committed to specific projects readying them to begin construction. The push to award funds was immense right after ARRA passed, then slowed appreciably in following months. As of April 30th, 2010, just over $39 billion had been awarded. Of that, less than one-third of funds, or $10.9 billion, has been received by states to begin projects. This equates to just over one-fifth of the total stimulus money allocated for infrastructure improvements currently being used to fund actual projects. While a $10.9 billion is a large injection into our nation's neglected infrastructure, the task at hand remains large. Let's hope that projects gain approval and funding is doled out with renewed ferocity in this second year.

Let's address the major short-term goal of the infrastructure plan, job creation. The Obama administration attempted complete transparency in job reporting, which proved to be a difficult task. Early reports in 2009 claimed that over one million jobs had been created within months of the act being passed. In fact the White House claimed that public and private forecasters estimated the Recovery Act was 'responsible' for 2 million jobs in its first year. The administration later admitted challenges in quantifying the number of jobs 'saved or created' by the Recovery Act and changed their terminology altogether to 'jobs funded by the recovery act'. Early numbers were revised and it was determined that from February 17th to September 30th, 2009, 633,376 jobs were funded by the Recovery Act. From last October 1st through the end of 2009, 608,311 jobs were funded by the Recovery Act and in the first quarter of 2010, 682,779 jobs were funded by the Recovery Act. While the numbers aren't as astonishing as what was first reported, the increase in job creation in 2010 is a reassuring trend. Could this be a leading indicator, demonstrating that we're on the verge of seeing the funded infrastructure projects go into full swing?

What are your thoughts?


Post a Comment