Monday, August 16, 2021

Not only not shovel-ready but not infrastructure.

From So, Why Didn't the 2009 Recovery Act Improve the Nation's Highways and Bridges? by Bill Dupor.  From the Abstract:

Although the American Recovery and Reinvestment Act of 2009 (the Recovery Act) provided nearly $28 billion to state governments for improving U.S. highways, the highway system saw no significant improvement. For example, relative to the years before the act, the number of structurally deficient or functionally obsolete bridges was nearly unchanged, the number of workers on highway and bridge construction did not significantly increase, and the annual value of construction put in place for public highways barely budged. The author shows that as states spent Recovery Act highway grants, many simultaneously slashed their own contributions to highway infrastructure, freeing up state dollars for other uses. Next, using a cross-sectional analysis of state highway spending, the author shows that a state?s receipt of Recovery Act highway dollars had no statistically significant causal impact on that state?s total highway spending. Thus, the amount of actual highway infrastructure investment following the act?s passage was likely very similar to that under a no-stimulus counterfactual.

Interesting post facto follow-up.  I recall that there were, within Democratic circles, significant complaints that too much funding in the Recovery Act went to masculine dominated industries such as road and bridge building and that there was an intervention and much of the bridge and road money ended up going to education and social programs.  In addition, as I think Obama later acknowledged in an interview, there simply were not many 'shovel-ready' projects.  It wasn't a spigot which could be turned on and off.

This research adds a confirmation to what was happening at the time.  The reduced funding for infrastructure building which did survive to make it through to the states was not additive.  The states used the fungible funding to cover what they already had budgeted and then redirected their own money to other programs.  

In other words, for a variety of reasons, bad policy, bad program design, intentional redirection, all the talk about infrastructure was a mirage.  Money got spent on political constituencies and few incremental investments were made in the nation's infrastructure, despite the marketing to that effect. 

Not unlike today when an infrastructure bill is being debated which does not primarily address infrastructure but is a grab-bag of social policy experiments and give-aways to preferred party constituents.  Not much for the nation at large nor for the nation's infrastructure.


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