Engineering and business scholars urged Bush administration officials to take a page from FDR’s New Deal and invest in infrastructure.
Ninety transportation projects in eight states are ready to go and could generate up to $20 billion in economic activity, according to a letter from 11 professors to Federal Reserve Chairman Ben S. Bernanke and Treasury Secretary Henry Paulson. The letter was sent Oct. 24.
The letter responds to earlier comments by Bernanke raising concerns that infrastructure investment would take too long to make a meaningful change in employment and the economy.
"One of the reasons that policy makers are putting forward not to invest in the nation's infrastructure as fiscal stimulus is that shaping, approving, planning, and developing infrastructure projects takes too long and critics say that it does not create new jobs and spending fast enough," say the academics. "While this may have been true during the Great Depression era, it is simply not true today at a time when hundreds of billions of dollars of infrastructure projects across America have already been approved but are sitting 'on the shelf' due to funding shortfalls."
The academic group included Raymond E. Levitt, engineering professor at Stanford University and director of the Collaboratory for Research on Global Projects, as well as engineering professors at the University of Illinois, Urbana-Champaign; Columbia University, Virginia Tech University, Clemson University and the University of Wisconsin, Madison. Also among the signatories is Witold Henisz of the University of Pennsylvania's Wharton School.
The letter urges government officials to "endorse the idea of a new New Deal" to channel infrastructure spending through state and local governments. They claim it would, among other things, create immediate employment, generate a high multiplier effect, remove growth roadblocks and spur more college graduates and young people to work in the "real" economy rather than in financial services, despite the lure of high salaries.
The academics concede that their infrastructure investment jumpstart program still faces challenges, including contracting lead time, the advent of winter conditions in parts of the US and industry capacity constraints.
However, the professors also offer suggestions for a phased investment approach.
"We have the ability to do something tangible," says Paul Chinowsky, a member of the group, and construction professor in the engineering dept. at the University of Colorado, Boulder. "This is so essential."
The academics are affiliated with Leadership and Management in Engineering and the Construction Working Group, which are compiling a list of projects in various infrastructure sectors that are approved, permitted, and waiting for funding and could be "effective" economic stimulants, they say.