By Robert Field
Last Monday morning we read how the Metro system in Washington, D. C. will cost a fortune to rebuild and may create a system shut down for month 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 agreement to construct another rail tunnel under the Hudson River.
These projects will generate perhaps a quarter trillion dollars direct and indirect spending. Had such projects been undertaken in 2009 as the vast majority of economics had urged, the work would be completed by now.
Now they will 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.
Had a second stimulus bill been approved in 2009 as requested by the Obama administration, much of the work would be completed by now, having provided much needed jobs and reduced the cost of federal and state assistance to the unemployed and disadvantaged. The overall impact would multiply as the spending trickled through the population.
The so called “fiscal conservatives” who blocked the stimulus will cry “But we would have done it at the expense of greater national debt.” They don’t understand that the real loss is when people and equipment stand idle. The rest is bookkeeping with the national debt being repaid from proceeds during times of prosperity.
Tax revenues soar during recovery. A health 2% of inflation help 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.)
Which bring up the point that the amount of national debt isn’t that important; it is its ratio to Gross National Product that counts.
Had an additional stimulus occurred 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 costs over the past couple of years. And by now we could increase taxes to pay back what was borrowed and to reduce inflationary pressures.
This isn’t just what the editor of NewsLanc thinks. It was the consensus opinion of almost all prominent economists in 2009.
It is tragic how with the war in Iraq and failure to properly address the recession how we have so weakened our nation. And both are largely the fault of the same peoples, the Neo-conservative and the so called but misnomered Fiscal Conservatives of the Republican Party.
