A Stimulating Debate, Part 2

Matt Yglesias argues today that a substantially bigger stimulus still would not have produced anything close to the Public Works Administration of the New Deal era, due to the kinds of government regulations we have in place for environmental impact, contract bidding, and oversight acting as a bottleneck on stimulus, defeating the purpose.

Two lessons from this. One is that I think we need some more real talk about environment-impact reports and community input—it’s good that we no longer do infrastructure projects with a total disregard for these things, but there’s a real need to transform these processes into something more streamlined that takes a finite and knowable amount of time.

The other is that we need to work much better on our automatic stabilizers. The paradox of ARRA is that even though the stimulus package was sort of enormous, in the aggregate there’s been no net public sector stimulus whatsoever once you take state and local government into account. What’s needed for future downturns is some kind of fairly automatic mechanism to prevent this state and local contractionary impact. Recall that this was also actually the big problem with the Roosevelt administration’s policy—for all the WPA-nostalgia that exists in some quarters there was almost no aggregate public sector stimulus until the World War II defense buildup. 

On the other hand Atrios strongly disagrees with that assessment that the bottleneck is there at all, if anything there's a backlog of badly needed infrastructure repairs needed thanks to Republicans cutting projects.

Yes certain kinds of projects were never going to happen with stimulus money, but there are plenty of on the shelf projects that could have happened if the money showed up. My local transit authority has plenty - not new SUPERTRAINS, just years of deferred maintenance projects (stations, bridges) - as does my local water authority. My local transit authority did get some stimulus money for projects, of course, but it could have gotten more. Maybe the money can't get out the door quite as fast as we would like, but it can get out there fast enough.

I'm going to have to go with Atrios on this one.  I look at cities like Colorado Springs having to close parks and cities across the country laying off people left and right while we've got roads, bridges, water mains, gas lines, sewers, subway tunnels, transit lines, and power grids in various states of disrepair all over the place.  Those repairs and improvements seem like worthy ways to employ Americans if we had more money to do so, but Republicans said no.  Remember, the only worthy government spending to a Republican is military.  Roads?  Those are fixed by lazy gubmint unions living like kings and young bucks driving Cadillacs.