By Robert Field
On Monday morning we read how the Metro System in Washington, D. C. will cost countless billions to rebuild and delay may cause a system shut down for months on end.
Last week the Port Authority of New York and New Jersey approved the reconstruction of Laguardia Airport, the replacement of the New York Port Authority Bus Terminal, and the expansion of Newark Airport.
Moreover, the states of New York and New Jersey at long last reached an agreement to construct a much needed second rail tunnel under the Hudson River.
These projects will generate perhaps a quarter trillion dollars direct and indirect spending. Had such projects been started in 2009 as the vast majority of economics had urged, the work would be completed..
Now these worthy projects will be constructed at a time of near full employment, so they will both add to inflationary pressures and crowd out private investment and other worthy governmental projects.
The Obama Administration had urged the passage of a second stimulus bill in 2009. The so called “fiscal conservatives”, largely Republicans, blocked the stimulus with the cry “It would add to the national debt.” They don’t understand (or choose not to) that the real loss is when people and equipment stand idle. The rest is ‘bookkeeping’ within the Federal Reserve and Treasury Department with the national debt being paid down during the soon forthcoming better times.
Tax revenues soar during recovery. A healthy 2% net inflation rate also helps erode debt, as was the situation for decades after World War II. (Debt as a percentage of Gross National Product was far higher at the end of the war than now, and ability to repay is a more important measurement of economic health than the actual debt amount.)
Had an additional stimulus bill been enacted as President Barack Obama had proposed, we would have been out of the recession by say 2011. We would have enjoyed far more tax revenue and had far less social dislocation and costs over the past several years.
And rather than now heaping logs on the inflationary fire with these big public projects, we would instead now be using the vastly greater revenues to pay down national debt, as was done during the Clinton Administration.
It is tragic how with the war in Iraq and failure to properly address the recession we have so weakened our nation. And both are largely the fault of the same people, the studiously ignorant and opportunistic right wing of the Republican Party.
