Warm Southern Breeze

"… there is no such thing as nothing."

To Reboot the Economy, $pend on Economic Infrastructure!

Posted by Warm Southern Breeze on Sunday, June 7, 2020

This is nothing new, per se.

The American Society of Civil Engineers has been saying this for quite some time, as well, which is that throughout America – coast-to-coast – we need to repair, enhance, and expand American economic infrastructure.

And, I’ve been saying that what we TRULY need to reinvigorate the economy since the onset of economic woes via the novel coronavirus, aka COVID-19, began to take its toll on our nation’s economy, is a wholesale reinvestment – top to bottom – in a repair, and expansion of our nation’s economic infrastructure.

While the “bailouts” for the individual citizens was good, and some of the Paycheck Protection Program for small businesses was also good, we STILL need to do MUCH, MUCH MORE!

And there’s something else which – of necessity – must be done. And that is, to CHANGE the Income Tax structure for ALL Americans, to expand and increase the Personal and Corporate Income Tax brackets (which since about 1980 has been compressed and reduced, so that now, the net effect is a flat tax), and to increase the rates upon the rich, wealthy, and well-to-do, and to lower, or eliminate them upon the impoverished, and disabled. And that includes ELIMINATING the Income Taxes Reagan imposed upon Social Security, and the “Paris Hilton Tax Cuts.”

Such a measure WILL “pay for itself” through enhanced, and expanded economic capability and capacity, and will prepare America for the next 50 or more years.

Oh!

And one more thing.

In 2016, the ASCE published a document titled “Failure to Act: Closing the Infrastructure Investment Gap for America’s Economic Future,” which stated in part the following:

“The cost of deteriorating infrastructure takes a toll on families’ disposable household income and impacts the quality and quantity of jobs in the U.S. economy. With deteriorating infrastructure, higher business costs will be incurred in terms of charges for services and efficiency, which will lead to higher costs incurred by households for goods and services due to the rising prices passed on by businesses.

“As a consequence, U.S. businesses will be more inefficient. As costs rise, business productivity falls, causing GDP to drop, cutting employment, and ultimately reducing personal income.

“From 2016 to 2025, each household will lose $3,400 each year in disposable income due to infrastructure deficiencies; and if not addressed, the loss will grow to an average of $5,100 annually from 2026 to 2040, resulting in cumulative losses up to almost $34,000 per household from 2016 to 2025 and almost $111,000 from 2016 to 2040 (all dollars in 2015 value).

“Over time, these impacts will also affect businesses’ ability to provide well-paying jobs, further reducing incomes. If this investment gap is not addressed throughout the nation’s infrastructure sectors by 2025, the economy is expected to lose almost $4 trillion in GDP, resulting in a loss of 2.5 million jobs in 2025.

“Moreover, workers who are employed will earn lower wages, and in the long term, many higher paying jobs in technology and other leading sectors will be replaced by jobs that fulfill needs brought on by the inefficiencies of deteriorating infrastructure.

“Closing each infrastructure investment gap is possible, and the economic consequences caused by these gaps are avoidable with investment.”

You can read that, and other entries associated with economic infrastructure, on this site by searching for the term “economic infrastructure.”

A final, parting thought:

We aren’t out of the woods yet… not by a long shot. Such economic prognostication is shared by many within, and without various universities, educational institutions, economic think-tanks, governmental, and non-governmental agencies throughout this, and other nations. And economic infrastructure spending would be like putting the country on a defibrillator, and giving it steroids, all at the same time.

The Chinese have.


Rebuild the Stalled Economy With Infrastructure Investment

By Scott Paul
Scott Paul is president of the Alliance for American Manufacturing.

There are two discussion topics that federal policymakers should be having right now: relief and recovery. Relief, for the estimated 40 million people this pandemic has put out of work as well as the millions of others impacted by the steps taken to slow its spread. Recovery, for the day when it’s safe to return to work but the demand for goods and services is still missing.

Some economists predict many jobs will simply disappear as industries use this moment to reorganize, compounding the economic crisis our nation faces.

But, as we all know, this isn’t the first time we’ve faced an economic crisis. In the 1932 presidential election, Franklin D. Roosevelt decisively beat President Hoover because of the latter’s inability to revive the economy in the early years of the Great Depression. Democrats eschewed Hoover’s volunteerism and leveraged the power of government to spur an economic revival, passing a landmark domestic preference bill that the lame duck president signed – the Buy American Act of 1933 – and then cleared the way as FDR expanded the federal response to the crisis.

The banking system was reorganized. Labor protections were established in exchange for regulating industrial production levels and price coordination. Farms were incentivized to limit production and thereby raise prices. The financial system was reined in, and a modest social safety net for our most vulnerable was established. This was the New Deal.

But the program born in this crucible that has arguably had the most lasting impact on American life was the Works Progress Administration – a national project that put approximately 8.5 million jobless people back to work. Those WPA workers laid roads and bridges, dug sewers, canals and culverts, built schools and post offices, and erected art installations.

It was a massive infrastructure program that is still physically evident today. The landmark Griffith Observatory (pictured) in Los Angeles. Midway Airport in Chicago. Camp David in Maryland.

Today’s disaster was brought on by pandemic, not a banking crash. But the nation’s needs today are similar. The economy is on the verge of atrophy. There are already armies of unemployed. Be it direct cash payments to every American or a functioning Paycheck Protection Program, millions more will soon need financial aid. And no matter who is president in 2021, we’re going to need a jobs program to put people back to work and infrastructure investment to drive it.

When our nation has faced wrenching change before, we’ve responded by building something more powerful – even if it was difficult, as the slow recovery from the Great Depression was. The shift from an agrarian to industrial economy forced hard changes, but many good ones too, like the creation of public education systems that reached those at the bottom of the economy. World War II meant sacrifice in virtually every American community, but our response was the Arsenal of Democracy, the GI bill and the economic framework for a middle class that lasted decades.

So far, the response to today’s pandemic has been far less consequential. More than 100,000 Americans have died, and Washington still quibbles about who to blame, the terms of business loans, and how far to extend unemployment insurance. It owes the nation much more than that.

This is the perfect time to lay the foundation for America’s 21st century infrastructure. We should rebuild and repair the useful national heirlooms created by the WPA and Interstate Highway System, and expand our networks of rural broadband, energy storage, and clean water systems.

It’s cheap to borrow, millions of Americans need work, and factories will be eager to supply the materials necessary to turn these ambitions into reality.

But getting this done will require political movement. Senate Republicans must persuade Mitch McConnell to act instead of using infrastructure as a bargaining chip. President Trump’s supporters should be prepared to hold him accountable for his ambitious but unfulfilled infrastructure promises. And House Democrats, as they did on the USMCA trade agreement, must be willing to get to “yes” with an administration that makes it hard for them to do so.

The history of this pandemic is going to include the needless deaths of thousands of Americans, as well as the social and economic disruptions to life in the United States. But the history isn’t entirely written yet. It doesn’t have to only be a nightmare. It can also show that, like our greatest generations, Americans in the 2020s rose to the occasion and built something that will outlast them. It’s time to get to work.

Scott Paul is president of the Alliance for American Manufacturing.

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