Obama to States: Invest in Infrastructure While It's Cheap

President Obama wants Congress to approve $50 billion in new infrastructure funds, but he wants states to throw in their share, too.
by | October 14, 2010

Earlier this week, the White House announced it would push Congress next month to approve $50 billion in new infrastructure investments. President Obama endorsed a new report from the Council of Economic Advisers that encourages the investments to be made now, while labor is available and construction costs are relatively cheaper.

But that report isn't just about federal investment. It calls on states to throw some cash in as well (emphasis ours):

Merely increasing the amount that we invest, however, must not be our only goal. Selecting projects that have the highest payoff is critically important, as is providing opportunities for the private sector to invest in public infrastructure. Given the significant needs for greater investment, the federal government cannot, and should not, be expected to be the sole source of additional investment funds. More effectively leveraging federal investment by pairing it with state, local and private investment is necessary to meet the challenges we face in expanding our transportation network.

The report also says that, while it might be tempting for states and localities to cut infrastructure spending because of stagnant revenues, it's crucial to keep investing in those projects now:

During recessions it is common for state and local governments to cut back on capital projects – such as building schools, roads and parks – in order meet balanced budget requirements. Past research has found that expenditures on capital projects are more than four times as sensitive to year-to-year fluctuations in state income than is state spending in general.51 However, the need for improved and expanded infrastructure is just as great during a downturn as it is during a boom.

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