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Home Publications Blogs Beat the Press $50 Billion in Infrastructure Spending Is Equal to 1.4 Percent of the Federal Budget

$50 Billion in Infrastructure Spending Is Equal to 1.4 Percent of the Federal Budget

Tuesday, 07 September 2010 04:19
It is also equal to about 4 percent of the $1.2 drop in annual demand (@ $600 billion in lost consumption and $600 billion in reduced construction) due to the collapse of the housing bubble. These would be items worth including in discussions of President Obama's latest infrastructure proposal for those wanting to know the impact it will have on the budget and the economy.
Comments (10)Add Comment
written by Wes, September 07, 2010 5:45
To have totally honest accounting it would be better to take total receipts (deficit free budget) without social security. This gives something like 3.5%.
Someone tell Obama that investment projects take time to implement.
written by Ralph Musgrave, September 07, 2010 11:14
To add insult to injury, it looks as though this latest trance of stimulus consists mainly of investment projects (infrastructure, etc). Well as the average mentally retarded cat knows full well, investment projects take time to get going (by which time inflation might be looming, and stimulus may be the last thing needed).

Indeed, looks like only a third of the last tranche of “stimulus investment spending” ($230bn) has actually been spent. See http://online.wsj.com/article/...bs=article

written by chris shelton, September 07, 2010 11:43
How much of this infrastructure spending is going to be a direct subsidy to the very industries that are causing globe warm? All most all of it.
Even worse, it's regressive
written by Jim, September 07, 2010 11:51
I just wrote a post on the highly regressive nature of his National Infrastructure Bank idea. It seeks to change the way we fund infrastructure from income based taxes to user fees and tolls. It's even worse than a consumption tax since it will include a corporate profit component.

written by Emin Orhan, September 07, 2010 12:17
My understanding is that this $50 billion will be spent over the next 6 years, so annually it amounts to about 0.67 percent of the lost demand, not 4 percent as you suggest.
written by Ron Alley, September 07, 2010 1:19
President Obama's infrastructure jobs proposal is not bad -- just too late, too little and too timid. Our President just doesn't get it. He refuses to take the battle to the Republicans. His proposal is for an infrastructure jobs program that is so deferential to conservatives that its impact as stimulus effect is guaranteed to be insufficient. As a result both Democratic leadership of government and his term are "just slip slidin' away".

Identical bills should be introduced simultaneously in the House and Senate. Speaker Pelosi should fast track the bill to passage in the House. Senator Reid should not accept a Republican filibuster and should bring a cloture motion to the floor daily to have the likely Republican filibuster votes will be recorded daily. President Obama should appear at a daily press conference and proclaim that a vote for the filibuster in a vote for ten years of economic stagnation and bring on unemployed construction workers from key districts and states each day.

Unfortunately, the program is just too weak to have a real, immediate and lasting impact. As a result, President Obama is justly worried that the worst result may be getting the program he has proposed and the criticism for enacting a program that increases the deficit without breaking the grip of the recession.

Very Weak
written by cgp, September 07, 2010 1:28
Umn, but you're comparing a *six year program* to a *one year loss in demand*. So, based on losing roughly between 1.2 trillion and 600 billion in lost demand over those six years and averaging it out to about 900 billion over those six years you'll get that the stimulus will compensate for 0.00925% of the demand weakness.
written by Terry, September 07, 2010 1:39
I wonder where Obama plans to get all the cement for the roads and runways, as his EPA just completed an emissions rulemaking that will likely cause a number of cement plants to close - we will end up buying cement from Mexico or China
written by cgp, September 07, 2010 1:56
I meant 0.925%.
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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.