User:Fastron

HOW TO SPEND A HALF-TRILLION DOLLARS

A proposal for Obama’s rescue of America

A great many Americans are unemployed and many of the rest are under-employed.

The infrastructure of our towns and cities is in great need of repair, renewal and upgrade.

The finances of the country at all levels are in deep trouble. The capital of Pennsylvania is declaring bankruptcy.

President Obama is seeking to spend a half-trillion dollars to re-energize the economy. A half-trillion dollars is about $1,400 per resident, adults and children, in the country.

Giving $1,400 to each resident would do little to remedy the ills of the country and economy. It would create a great flurry of retail sales followed by a crash of overstocked inventory. Efforts to subsidize individual expenditures on housing upgrades have generally led to colossal boondoggles. Giving $1,400 per resident to the bankers would be about as effective as the last gift they received. Bankers don’t build things. They just pocket their percentage. Giving $1,400 per resident to each government in the country could do a great deal.

I suggest that the President should present Congress with the following proposal. The half-trillion dollars is needed to refresh, renew and upgrade the country’s infrastructures. The needed work is so varied and multi-faceted that the choice and control of the expenditures must be out of the hands of Washington. To minimize waste and profligacy, this fund will finance sixty percent of any and all projects. The other forty percent must be raised by the agencies and governments controlling the work.

The half-trillion dollars will be distributed on terms as follows:

The federal government will make available to its own agencies ten percent of the total, fifty billion dollars, to be used exclusively for renewal and upgrade of inter-state infrastructure. This could include rapid transit, utilities, airports and such.

The federal government will make one hundred and forty dollars per resident available to each state for renewal of its intra-state infrastructure.

The remaining eighty percent, four hundred billion dollars, would be available to the lower levels of government, the counties, towns and villages of the country at the rate of eleven hundred and twenty dollars per resident.

All of the projects must be capital projects which have been put off for lack of funds for these many years. Sewer and water systems, roads and public transit systems, public schools and colleges would be the first to come to mind in such an initiative.

Let us consider how this might work. Firstly, Congress and Washington would not be deciding how the money is to be spent, beyond the first definitions of capital projects. Only a small bureau would be needed to assure the bona fides of proposed projects and the dispersal of the funds. If Washington is not selecting the projects, Washington lobbyists are out of the picture.

All governments and agencies would look to their territories for projects that meet the criteria set out. Thousands of people would be looking optimistically at their departments to remedy decrepit facilities and obsolete practices. This alone would have a salutary effect on the mood of the country. The local politicians and civic workers would be looking at their departments with enthusiasm for development rather than dread for the next budget cut.

As projects were selected and confirmed that they fit the criteria, planners, architects engineers and contractors would be engaged to develop and implement the plans. Initial funds would need to be borrowed to finance these efforts, relieving banks of the great piles of cash sloshing around in the financial system. People would need to be employed, relieving the unemployment and welfare funds of some of their burden. The Half-trillion would only move out as the work was being done.

As work gets under way on the projects, builders, tradesmen and labourers get hired and paid. Again, local banks would be the source of the capital. Wall Street would be out of the frame. As with all large contracts, the buyer pays when work is done at various stages. So also here, the half-trillion dollar fund would pay its share according to the progress payment schedules initially set out in each project. As usual, all the insurance and bonding performance guarantees would be in place, making the insurance companies happy.

Since there would be many thousands of projects, big and small, going on at their own schedules, there would be no great boom/bust cycle set up. Many projects would be over in a year, but most would last several years and a few, such as rapid transit, might last a decade before completion. While these projects were going on, the rest of the economy would also start percolating and the country would return to four percent unemployment.

With such an initiative, there would not be a great flood of money flowing into the already engorged banking system. Rather, there would be a steady flow of cash into the economy at all levels and across the country. There would not be a great ideological battle between left and right. All arguments would be local. A village of one thousand people could undertake projects totaling close to two million dollars. A city of a million could take on a rapid transit project.

The requirement for a forty percent participation from the local authority would keep most boondoggles out of the mix. Agencies and towns would think carefully in selecting their projects, ensuring a high quality in all activities.

The impact of such an initiative would be felt immediately, even though cash would not be flowing from federal coffers for some time. Because the flow of funds would be spread over several years, the impact on the national budget, and on local budgets as well, would be relatively small. Tax revenues from the increased activity would be flowing in long before the last of the funds were flowing out.

Some senior citizens may think this plan sounds familiar. It was federally financed public works that pulled the American economy out of the great depression in the 1930s.

Congress might well refuse to pass such an initiative. The Tea Party enjoys shooting down all Obama initiatives, particularly the ones that make sense. However, there would be a great clamor from the lower levels of the polity, which would undermine the Tea Party’s destructive efforts. The Occupy Wall Street movement demonstrates that the citizens are getting restless. The Big Money, which is the lifeblood of most politicians, would be happy to support the program - it’s good for business. How could congress refuse to pass such a program even if it had a big tax bite on the richest citizens? It would be political suicide since the money would be going to their constituencies. It would assure President Obama’s re-election.

Ron Fast Ancaster Ontario

As a Canadian, I’m very interested to see my neighbors return to good health.