by Marshall Kirby, Public Policy Analyst

President Obama laid the foundation of the general goals of his Administration for the coming months ahead.  Imploring a divided Congress to act in favor of enhancing America’s physical infrastructure through roads, railways, redesigning our ports and airports, making a more efficient energy grid, expanding research on green and alternative energy, and expanding access to broadband.  Encompassing all of these, President Obama argued that America’s economy will be stronger, produce better paying jobs, and be more competitive.

Public investment is not a new idea, and since the New Deal under FDR, politicians have been pushing agendas which encompass education, infrastructure, and technology.  In the 1990’s President Clinton had his own policy agenda which encompassed an investment in technology and research science after the breakthrough of technology like the PC and the internet.  Since Clinton, conservatives have been very skeptical of public investment in these areas, and President Bush pushed for investment in education through No Child Left Behind.  Even recently, President Obama, in advocating for the Recovery Act, stressed the importance of construction and infrastructure projects.  His idea hit strong Republican opposition, and infrastructure became a watered down portion of the stimulus.  Instead of pushing for the most crucial projects, the Administration looked to “shovel ready” ones which would put the hard hit construction sector back to work.

Without a more detailed plan laid out by the White House, it is hard to develop any accurate analysis of the President’s version of public investment.  Not to mention this plan will face strong opposition from a Republican controlled House of Representatives, which is more concerned with spending cuts than public investments.  Even the rebuttal to the State of the Union given by Paul Ryan displayed that the GOP finds these projects to be unsuited for the policy remedy they have prescribed for an ailing economy.

What most analysts (myself included) find interesting is that the President talked of deficit reduction and spending cuts as well.  While not giving real numbers in speaking to deficit reductions, it seems difficult to fathom that these long term spending cuts and investments can be done at the same time.

Like I mentioned earlier, without real numbers it is difficult to take a firm position on the effectiveness of President Obama’s agenda for public investment.  However, the tangible need for new and improved infrastructure is a recognized need.  America, despite our relative economic strength lags behind Europe and other developed nations in physical infrastructure.  We do not have a system of high speed railways to move both cargo and people between cities at a much more energy and time efficient rate.  Our roadways need repair, improvement, and expansion.  We also are not the leader in developing alternative and green energy sources.  The energy grid we have now will not be able to keep up with the demand for energy as our economy grows.  Lastly, and most astounding, is that America, the country who developed and brought the internet to the world, is lagging behind other developed nations in broadband access and capacity.

Referencing the issue of broadband, the President made a very important and accurate statement.  In today’s changing economy the nature of commerce has gotten so that business can be set up primarily through an internet connection.  As the world becomes more reliant on technology and our economies become more interconnected and interdependent, high-speed internet access is essential for all businesses, no matter how small or large.  With our current broadband capacity, we are missing out on allowing entrepreneurs to pursue their dreams, better themselves, and drive our communities towards greater prosperity.  Most rural and low income urban areas lack the broadband infrastructure needed for individuals and businesses to access high-speed internet or the investment in capacity needed to make it affordable.

The President’s speech referenced efforts of the New Deal to bring electricity to rural areas.  While he did not reference this directly to broadband, the situations can be viewed as analogous or at the very least, similarly.  Rural electrification projects during the Great Depression proved to be a positive long term development for the communities in the long run.  If the President can get a cost effective and well targeted broadband expansion initiative passed, there will be a strong possibility that long term benefits can be seen for struggling areas.

Our country is clearly at a crossroad where we cannot afford to deficit spend like we have and we also cannot ignore spending on public investments entirely.  As the years pass, it will get more difficult to grow our economy without expanding education to meet the needs of a changing economy or to enhance our infrastructure to make commerce more cost and time efficient.  If this were to happen, it could produce a serious two headed problem: an economy which is stagnant and persistent deficits.  To succeed in this proposal, President Obama and Congressional Democrats will have to work closely with Republicans to produce meaningful spending cuts to the most expendable programs, so much so that it can create enough room in the budget which public investment can be funded while still reducing the deficit.

The columnist Thomas Friedman makes similar remarks in his Op-Ed in the New York Times.  He argues that cutting expenditures where possible to make room for investments in education and infrastructure are the only meaningful long term way to move forward out of the metaphoric “economic hole” we have dug ourselves into.

As entrepreneurs and business advocates, we need to pay close attention to this policy debate.  Well targeted and cost effective spending on public investments can end up being a major boost to our competitiveness.  However, we must continue to hold our elected officials accountable for their proposals and insist that new funding of public investment does not resemble the Recovery Act’s “shovel ready” guidelines.  Instead, we need to stand up and advocate for infrastructure and educational investments which will produce long term results.  Perhaps President Obama’s call for a National Infrastructure Bank, which will determine criteria for funding priorities, would be a helpful addition, as it would eliminate earmarks from Congressmen for pet projects in their districts.

Mr. Kirby joins The National Puerto Rican Chamber of Commerce with an experienced background in Public Policy Analysis.  He has worked for Americans for Informed Democracy, the Center for US Global Engagement, and for local governments in Virginia on issues ranging from international finance, national security, and other areas of foreign and domestic policy.  He holds a Master of International Development Degree from the University of Pittsburgh.

Marshall can be reached at 866-576-5222 x 8, or MarshallK@NPRChamber.org.

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