Why Obama's New $50 Billion Infrastructure Stimulus Will Flop On Every Level

Barack Obama, may 2010, graduation

Photo: Flickr

You can’t call it a stimulus, but Obama has announced a new $50 billion infrastructure initiative.This is going to be a big “nothing” on two levels.

First, we hate to say it, but $50 billion just isn’t needle moving, especially when you consider that the initial stimulus was $700 billion, and critics who said it was too small were looking for at least another half-a-trillion (or about that).

But beyond that, it won’t work out politically.

That’s what Paul Krugman correctly pointed out in his latest piece. Because the initial efforts to stimulate the economy failed (Krugman says it’s because they were too small) the public isn’t inclined to trust follow-on efforts that work along the same lines. That’s also why the new homeowner bailout will flop (because after HAMP nobody thinks the government can do much for housing).

If Obama wants to break this cycle (of public disillusionment with stimulus) it needs to be something radical and clear like a payroll tax holiday. We’re intrigued by that — unfortunately it doesn’t sound like this is actually on the table.

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.