The US government needs to spend a lot of money on something even less sexy than highways

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The push for fiscal stimulus is beginning to gain steam. Top finance names, both presidential candidates, and financial institutions’ strategists are all on board for more government spending.

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.

Typically, the idea of stimulus brings to mind large highway projects and new bridges or, for instance, a new tram at New York City’s LaGuardia airport (that has drawn some criticism).

“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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