At least 188,000 California residents have been evacuated from the Oroville area due to concerns about the integrity of the country’s tallest dam. The latest potential national infrastructure emergency has Americans anxious for President Donald Trump to begin his trillion, 10-year infrastructure spending plan.
Unfortunately, the impact of the plan may take much longer to materialize than Trump and his supporters realize.
These Things Take Time
Back in 2009, former President Barack Obama made some lofty promises about the infrastructure overhaul that his $800 billion economic stimulus plan would provide. Obama used the phrase “shovel-ready projects” in reference to construction projects that could begin right away.
In the end, however, only $98.3 billion of the $800 billion stimulus was dedicated to transportation and infrastructure. Of that $98.3 billion, only about $27.5 billion was actually spent on transportation infrastructure projects. Why?
“The problem is that spending it out takes a long time, because there’s really nothing – there’s no such thing as shovel-ready projects,” Obama said in a 2010 interview with the New York Times.
When it comes to economic stimulus, local governments may take years to begin actual construction even once they receive funding. The reason why such a small portion of the American Recovery and Reinvestment Act of 2009 ended up spent on infrastructure is that the projects are simply too slow to get off the ground to provide meaningful near-term stimulus.
“If you are talking about stimulating the economy, ‘shovel ready’ doesn’t mean get the money on Monday and start on Tuesday,” former Pennsylvania governor Ed Rendell said.
“When [Obama] says there’s no such thing as ‘shovel ready,’ he’s right...When we said ‘shovel ready’ we meant ‘shovel ready’ in the way we do things.”
If Trump intends to get his projects up and running faster than Obama did, he will have to cut through a sea of red tape that stands in front of him.
While the 2009 stimulus package may not have fixed the nation’s infrastructure, it certainly did its intended job of getting the economy back on track. Since the stimulus bill was signed back in February 2009, the SPDR S&P 500 ETF Trust (NYSE: SPY) is up 194 percent.
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