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Obama’s Next Trillion Spending Might Be Worth It

Author: Amity Shlaes, Former Hayek Senior Fellow for Political Economy
December 29, 2009
Bloomberg

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President Barack Obama is under fire for saying he wants to boost investment in infrastructure in the next decade. The critics say this is flawed stimulus because infrastructure projects take too long to get started and don't boost the economy now.

Obama's best move would be to stop spending. But given that he won't, and that he has three more years in office, the right kind of infrastructure splurge might not be such a bad idea-especially if you don't call it a stimulus.

That at least is what the record of the 1930s, 1940s and 1950s suggests, especially when it came to the classic American infrastructure project, highway construction.

Back in the 1930s, presidents started with the proposition that the primary aim of all spending should be to put people to work. Road construction was viewed as one of the tools to that end. In a single year, between June 1933 and April 1934, relief workers repaired 500,000 miles of highways.

As historian Mark Rose has noted, in the mid-1930s, almost $3 billion, then a good share of an annual federal budget, was poured into highway projects by relief officials and the Bureau of Public Roads.

But observers, including President Franklin Roosevelt himself, began to notice flaws with this plan. For one thing, as today, road projects were not shovel-ready-their lengthy planning coincided with the direst moments of recession.

 

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