February 6, 2009

Stimulus in Maryland


New I-95 spaghetti at the Beltway

If economic investment in infrastructure is such a big stimulus to the economy, Maryland should already have gold flowing in the streets.

The state got a huge jump on President Obama's approach to economic stimulus when it went into a seemingly bottomless hole of debt last year to start construction of the InterCounty Connector highway in Montgomery and Prince Georges County. That highway was originally supposed to cost about $2 Billion, but now nobody really knows what the price tag will be. It will certainly cost much more than that.

Construction to widen Interstate 95 north of Baltimore is another $1.4 Billion injected recently into the local economy, and the final cost of that is still unknown as well. Meanwhile, the reconstruction of the Woodrow Wilson Bridge from PG County to Virginia is also still going on, injecting still more billions into the economy.

Compared to all that, the Maryland share of the trillion dollar Obama stimulus plan for transportation will amount to pocket change - approximately half a billion. Vice President Biden was in the state yesterday touting $2.9 million (with an "m") to renovate the Brunswick MARC station as an example of the new stimulus spending. Maryland Transportation secretary John Porcari pointed out that the old platform at Brunswick was tripping up women in high heels. Does this mean that high heels are a key to economic recovery?

The Brunswick MARC station may be a great project, but it was certainly a low priority for MDOT since they spent billions elsewhere before they got to it. What projects does the state of Maryland think are really important? The InterCounty Connector and I-95 widening, of course. These are the projects that the state had decided are worth spending billions on. Not the projects in the current stimulus package.

Every project needs to be evaluated on its own merits. If the MARC station project was worth it, then it shouldn't have had to wait.

The problem with infrastructure spending as an economic recovery tool is that it focuses money into a relatively small sector of the economy, where investment is inflexible and is not labor intensive. True economic recovery would be broad based, where investment in monetary and human capital would naturally flow to those sectors where it would provide the greatest and most labor intensive returns. Obama's economic advisers reportedly say that infrastructure is the best sector to accomplish this, but economic studies have always persistently said that small business is the greatest engine to economic growth.

Another big problem with infrastructure is that the payoffs happen over a very long period of time - decades rather than months. Maryland will not be seeing the true impact of the InterCounty Connector, Woodrow Wilson Bridge, I-95 widening and other highway projects - for better mobility and/or greater sprawl, etc. - for decades. And who knows? By that time, maybe women's high heels will be passe.


  1. If small businesses are the engines of economic growth, but infrastructure spending is the preferred method of lawmakers, it seems to me there is a path to synergy. Here a good portion of infrastructure spending could be devoted to funding the rail transit lines we so desperately need--lines that could connect existing thriving commercial areas with new customers, and make less viable commercial corridors more viable by infusing these struggling/underdeveloped districts with a new potential customer base that has a readily available and convenient way to reach these new retail districts. I have read that infrastructure spending works best when it is spent on projects that have benefits going forward. I can't think of a more beneficial infrastructure project for the city of Baltimore in the present and in the future than a real rail transit system.

  2. Smart words.
    And isn't spending on highways just encouraging sprawl & inefficiency? It feels like they're working off of an old model...

    And FYI, we've linked to your blog from our blog!


  3. Well, let's face it. The stim package is not fresh, outta the box thinking. It is juicing up a slew of existing programs and just tossing more cash into what has been going on for a long time. Infrastructure SOUNDS good because of our history with the WPA and CCC (which recruited labor from among the unemployed down-and-out, and thus differ from the current program, most likely to benefit card carrying members of the heavy operators' local) and then a bunch of works programs in the late 70's-early 80's. Sure, it creates short-term work for some construction workers - then you are left with whatever residual benefit the actual object of construction can yield. So, yes, you'd hope the states are prioritizing well. But I'm far too cynical to think that'll happen in those now smoke-free back rooms where the deals are cut.