While the push for more stimulus gains, the question becomes what to spent the windfall on.
Neil Dutta at Renaissance Macro had a suggestion for lawmakers, instead of spending the stimulus on something big and flashy, spend it on something necessary.
“When most hear the term ‘easy fiscal policy,’ we tend associate that with more public spending on highways, streets, and transportation projects such as airport passenger terminals,” wrote Dutta in an email Tuesday.
“However, it is not immediately clear that this is where fiscal policy should be aimed should the stance of policy become more accommodative.”
For one thing, said Dutta, spending on transportation spending is above its average from 2002 to 2007. Second, there are other needs that are more pressing, as evidenced by recent calamities.
“Where could we use more money?” Dutta asked.
“Given the recent water crisis in Flint, Michigan perhaps it should not be too surprising to see that public construction spending on our water supply is running just 0.07% of GDP, lower than at any time in the last decade.”
So not only would it help an underfunded part of our infrastructure, but it addresses a recent political issue.
The only problem with this plan is that there is not a lot of fanfare over a new water filtration plant. The conventional wisdom is that lawmakers are more likely to focus on projects that have a ribbon cutting and draw some political benefit despite their limited economic impact (see: the LaGuardia train).
Additionally, it should be noted that America’s roads and bridges are in terrible shape, so one should assume that Dutta’s suggestion perhaps should be in addition to continued transportation investments.
Either way, fiscal stimulus appears to still have some way to go before it is a reality and lawmakers decide where to allocate it.
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