RALEIGH – If you’ll pardon an unabashed carnivore’s analogy: It’s great when you can kill two birds with one stone, but when you can’t, aim at the big one.
When it comes to debates about economic stimulus, there are lots of rocks being shot at all sorts of different targets. The politicians and lobbyists involved claim that their pet projects will both create long-term value for the state and engineer a short-term stimulus. But often, their claims don’t really make any sense.
The Triangle Business Journal reported on an interesting case this week: transit funding. In response to Washington’s invitation, the North Carolina Department of Transportation has identified $6.2 billion in projects that could be undertaken swiftly and meet state transportation priorities. Some 83 percent, or $5.2 billion, are bridge and highway projects. (That’s too low, a topic for another day.)
Another $374 million would be directed to transit projects. A large percentage of this amount – 80 percent in the case of Triangle-area transit spending – does not involve the creation of new construction jobs. DOT officials want to use federal money to subsidize fares on existing lines, expand service, and purchase new buses.
Barry Jenkins, who lobbies for the construction industry, doesn’t like the DOT priority list. Buying new buses could well increase or save manufacturing jobs in heavy-vehicle plants, but largely outside of North Carolina. “Let’s face it, this is the time for North Carolina to be a little selfish,” Jenkins told TBJ.
But it would be penny wise and pound foolish to expend hundreds of millions of dollars on transportation projects that yield fewer long-term benefits for North Carolinians but possibly more short-term benefits for North Carolina construction firms. As long as Congress and the Obama administration don’t do anything colossally stupid – such as raising taxes, trade barriers, or regulations that impede entrepreneurs and destroy competitiveness – the country will emerge from recession in the intermediate term. When we do so, economic recovery will be stronger and broader to the extent that tax dollars have spent in ways likely to generate the highest practical returns. In transportation, we’ll be better off to the extent that tax dollars have been invested in ways that best reduce traffic congestion, increase safety, and ensure long-lived assets that will be adequately maintained over the ensuing decades.
Favoring new construction over other spending in transit means, inevitably, replacing bus lines that run on existing roadways with new rail lines and transfer stations. For many reasons, this would be a mistake. Because of North Carolina’s development patterns, rail will never be as efficient as buses in moving significant numbers of people to where they want to go. Buses also have the advantage of flexibility. Routes can be adjusted in the future to fit the developments that actually occur and prosper. Once you lay track, however, you’re pretty much stuck with it. One of the key lessons policymakers should have learned from the past couple of years is that accurate predictions are difficult to make, and that it’s better to be prudent and flexible with tax dollars than to be audacious and prescriptive.
Disputes over the varied goals of stimulus spending aren’t limited to the state’s transportation priority list. In Fayetteville, for example, elected officials have been arguing about $84 million in stimulus recommendations from the city staff. They include such high-priority items as subsidized day care and a $12,000 Segway for the police department. Should such spending by subsidized by federal taxpayers? Given that the money would be borrowed, would such spending created true capital assets with value to the city, state, or nation in the long run?
Given the likelihood that “stimulus” is going to become little more than huge, permanent increase in debt, the size of government, and the federal government’s intrusion into state and local affairs, the best outcome would be for the legislation to collapse of its own ponderous weight. The second-best outcome, I suppose, would be that Washington condition any aid to states and localities on the adoption of strict spending limits going forward, so that federal aid doesn’t just become another incentive for politicians to make poor fiscal decisions.
Naturally, I expect to be disappointed. The most likely outcome is that all those stones will end up smacking taxpayers right between the eyes.
Hood is president of the John Locke Foundation