Commentary on stimulus spending for transportation
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Jerry Schneider
Nov 19, 2009, 11:53:52 AM11/19/09
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This is copied from the Freakonomics blog
----------------------------------------------
November 17, 2009, 10:49 am
Shovel Ready or Ready to Shovel?
By
<http://freakonomics.blogs.nytimes.com/2009/11/17/shovel-ready//author/eric-a-morris/>ERIC
A. MORRIS
Remember the transportation stimulus package?
Whatever happened to that money? I’m pretty sure
it got allocated, but weightier transportation
stories like hot-air-balloon fraud seem to have
bumped highway spending off the front page. To
catch you up, here are some recent numbers that are worth mulling over.
“One man’s bureaucratic red tape is another’s
essential framework to prevent the public from being ripped off.”
Figures from the California Department of
Transportation show that, as of late October,
over $2 billion in federal highway funds had been
allocated to the state when the American Recovery
and Reinvestment Act passed in February. Of that
sum, only $837 million had been awarded in
construction contracts. Even more surprising,
only $51 million, or about 2.5 percent of the
total, had actually been disbursed. Given all the
talk when the ARRA was passed about the many
projects that were “shovel ready” and primed for
construction, this is perhaps a bit
disheartening. After all, this spending was
pitched as a way to pump immediate life into a collapsing economy.
Before you lay siege to the Sacramento statehouse
with your torches and pitchforks, there are many qualifying caveats.
First, don’t single out California. Overall, the
U.S. Department of Transportation has managed to
disburse only $5.5 billion to the states
<http://www.recovery.gov/Transparency/agency/reporting/agency_reporting1.aspx?agency_code=69#>out
of the $30.5 billion in available transportation
funds. Unless the bulk of the money has
accidentally disappeared between the couch
cushions in the DOT employee lounge, other states
are having trouble spending quickly as well.
Second, there are good reasons for the slow pace
of the process. Many procedures have to be
followed before government money can be spent,
especially on big capital investments. And one
man’s bureaucratic red tape is another’s
essential framework to prevent the public from
being ripped off. Would you like the contracts
awarded without a competitive bidding process, or
would you like to have the construction cause
irreversible environmental damage? If not,
proposals have to be prepared, projects evaluated
and prioritized, studies completed, presentations
given, bids weighed, plans finalized, and so on.
Also, these figures may mask a degree of spending
that has already taken place. Undoubtedly, there
has been some stimulus as private contractors
spend money (e.g. take on new staff) in
anticipation of the arrival of stimulus funds.
Also, there was some acceleration of state
projects that were already in the pipeline.
In addition, there is general consensus that,
although the economy has been showing signs of
life lately, the recovery will be slow. So the
transportation stimulus, even if a bit late in arrival, will still be welcome.
Finally, I have no doubt that many very important
transportation benefits will flow from the
facilities that are constructed or repaired using
this money. The administration was not looking
only at the stimulus effects of ARRA
transportation package. It was also considering
the eventual payoffs in terms of time saved,
increased productivity, fatalities prevented, and
so on. As Brian Taylor of UCLA and Jianling Li of
the University of Texas at Arlington have
demonstrated, larger projects, and projects that
are more capital-intensive, have slower outlay
rates. Thus, while simple tasks like road
resurfacing can plow ahead quickly, more
“game-changing” and ambitious investments like
building highways or rail transit lines, adding
HOV lanes, or improving interchanges are bound to take a while to gear up.
But I would like to make one plea as a result of
these numbers. That is that the phrase “shovel
ready” be defined as “ready to shovel.” If we’re
looking at two months of shovel design, then a
month of steel tensile strength testing, then two
more months evaluating the bid from the Matsuhito
Shovel and Spade Conglomerate, then a three-month
wait while the president’s Council on Shovel
Safety comes out with its report, we should
probably call it “bureaucracy ready,” or perhaps
“advanced-planning ready” if “bureaucracy” is too
pejorative a term. If we’re promised immediate
stimulus we have a right to immediate stimulus;
if the system will take a while to gear up, no
matter how worthy the reasons, we have a right to know that going in.
----------------------------------------------
November 17, 2009, 10:49 am
Shovel Ready or Ready to Shovel?
By
<http://freakonomics.blogs.nytimes.com/2009/11/17/shovel-ready//author/eric-a-morris/>ERIC
A. MORRIS
Remember the transportation stimulus package?
Whatever happened to that money? I’m pretty sure
it got allocated, but weightier transportation
stories like hot-air-balloon fraud seem to have
bumped highway spending off the front page. To
catch you up, here are some recent numbers that are worth mulling over.
“One man’s bureaucratic red tape is another’s
essential framework to prevent the public from being ripped off.”
Figures from the California Department of
Transportation show that, as of late October,
over $2 billion in federal highway funds had been
allocated to the state when the American Recovery
and Reinvestment Act passed in February. Of that
sum, only $837 million had been awarded in
construction contracts. Even more surprising,
only $51 million, or about 2.5 percent of the
total, had actually been disbursed. Given all the
talk when the ARRA was passed about the many
projects that were “shovel ready” and primed for
construction, this is perhaps a bit
disheartening. After all, this spending was
pitched as a way to pump immediate life into a collapsing economy.
Before you lay siege to the Sacramento statehouse
with your torches and pitchforks, there are many qualifying caveats.
First, don’t single out California. Overall, the
U.S. Department of Transportation has managed to
disburse only $5.5 billion to the states
<http://www.recovery.gov/Transparency/agency/reporting/agency_reporting1.aspx?agency_code=69#>out
of the $30.5 billion in available transportation
funds. Unless the bulk of the money has
accidentally disappeared between the couch
cushions in the DOT employee lounge, other states
are having trouble spending quickly as well.
Second, there are good reasons for the slow pace
of the process. Many procedures have to be
followed before government money can be spent,
especially on big capital investments. And one
man’s bureaucratic red tape is another’s
essential framework to prevent the public from
being ripped off. Would you like the contracts
awarded without a competitive bidding process, or
would you like to have the construction cause
irreversible environmental damage? If not,
proposals have to be prepared, projects evaluated
and prioritized, studies completed, presentations
given, bids weighed, plans finalized, and so on.
Also, these figures may mask a degree of spending
that has already taken place. Undoubtedly, there
has been some stimulus as private contractors
spend money (e.g. take on new staff) in
anticipation of the arrival of stimulus funds.
Also, there was some acceleration of state
projects that were already in the pipeline.
In addition, there is general consensus that,
although the economy has been showing signs of
life lately, the recovery will be slow. So the
transportation stimulus, even if a bit late in arrival, will still be welcome.
Finally, I have no doubt that many very important
transportation benefits will flow from the
facilities that are constructed or repaired using
this money. The administration was not looking
only at the stimulus effects of ARRA
transportation package. It was also considering
the eventual payoffs in terms of time saved,
increased productivity, fatalities prevented, and
so on. As Brian Taylor of UCLA and Jianling Li of
the University of Texas at Arlington have
demonstrated, larger projects, and projects that
are more capital-intensive, have slower outlay
rates. Thus, while simple tasks like road
resurfacing can plow ahead quickly, more
“game-changing” and ambitious investments like
building highways or rail transit lines, adding
HOV lanes, or improving interchanges are bound to take a while to gear up.
But I would like to make one plea as a result of
these numbers. That is that the phrase “shovel
ready” be defined as “ready to shovel.” If we’re
looking at two months of shovel design, then a
month of steel tensile strength testing, then two
more months evaluating the bid from the Matsuhito
Shovel and Spade Conglomerate, then a three-month
wait while the president’s Council on Shovel
Safety comes out with its report, we should
probably call it “bureaucracy ready,” or perhaps
“advanced-planning ready” if “bureaucracy” is too
pejorative a term. If we’re promised immediate
stimulus we have a right to immediate stimulus;
if the system will take a while to gear up, no
matter how worthy the reasons, we have a right to know that going in.
Kirston Henderson
Nov 19, 2009, 12:06:52 PM11/19/09
to transport-...@googlegroups.com
on 11/19/09 10:53 AM, Jerry Schneider at j...@peak.org wrote:
> This is copied from the Freakonomics blog
> ----------------------------------------------
>
> November 17, 2009, 10:49 am
>
> Shovel Ready or Ready to Shovel?
Thanks, Jerry. Very true and to the point. I think that most of knew
> This is copied from the Freakonomics blog
> ----------------------------------------------
>
> November 17, 2009, 10:49 am
>
> Shovel Ready or Ready to Shovel?
that the guy in the white house simply had no real conception of how
projects work, otherwise, he would never have uttered the silly "shovel
ready" term.
I know that in our own case, if someone awarded us a contract to build
one of our systems, it would take us several months before we could really
manage to spend much money other than start hiring some extra engineering
and other personnel and each of the project plans that we have prepared show
just that.
Kirston Henderson
MegaRail®
Michael Weidler
Nov 20, 2009, 11:21:23 PM11/20/09
to transport-...@googlegroups.com
| Wasn't it your buddy Shrub...er Bush who started all of this? Or did he just bail out the fat cats on wall street? --- On Thu, 11/19/09, Kirston Henderson <kirston....@megarail.com> wrote: |
|
Kirston Henderson
Nov 21, 2009, 3:14:40 PM11/21/09
to transport-...@googlegroups.com
on 11/20/09 10:21 PM, Michael Weidler at pstr...@yahoo.com wrote:
> Wasn't it your buddy Shrub...er Bush who started all of this? Or did he just
> bail out the fat cats on wall street?
>
You need to check your memory.
> Wasn't it your buddy Shrub...er Bush who started all of this? Or did he just
> bail out the fat cats on wall street?
>
Kirston Henderson
MegaRail®
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