Direct public spending is more effective than other forms of fiscal relief because every nickel gets spent and jobs are created directly. What is today’s equivalent of the World War II buildup, minus the war?
First, we need huge investment in hospitals and medical supplies. We need to reclaim supply chains for products like N-95 masks and ventilators that have been moved abroad. Government has the authority in an emergency to produce these needed materials itself if contractors can’t be found. In World War II, the Reconstruction Finance Corporation underwrote more than $20 billion in war production plants. Some of these were called GOCOs, for government-owned, contractor-operated. Upgrading our capacity to deal with the public health crisis could be phase one of the plan.
Second, according to the American Society of Civil Engineers, the United States will need $4.5 trillion for deferred maintenance of basic public infrastructure by 2025 — roads, bridges, water and sewer systems, power grids, rail lines, tunnels and public buildings. Take the train from New York to Washington and you will see a living museum of 19th century infrastructure.
Modernizing some of this will take advance planning, but there are trillions of dollars in projects that state and local government could begin this year or next. All that’s missing is the federal money. These projects will of course take trained workers, and a big part of the World War II model was investment in worker skills.
Third is the need for massive investment to slow down global climate change and prepare for expected storm surges and coastal flooding. We need to replace carbon-based energy sources with clean and renewable ones. We need to upgrade commercial buildings and homes to make them far more energy efficient.
“Smart” power grids can save costs and make the economy more resilient to climate change. We will need to spend a lot of money on flood barriers. With fossil fuel companies devastated by crashing prices and the toll on fracking and shale, this is a particularly good time to invest in green energy alternatives. If government is going to spend huge sums to keep the economy afloat, we should get something tangible beyond mere survival.
Even with the strategy of social distancing to slow down the spread of the virus, there are still plenty of essential workers on the job — police and fire, first responders, people who keep gas, electric, phone, cable and water systems running. They could be joined by work crews on public infrastructure projects. Ironically, many construction projects have been shut down — partly because construction workers use the same N-95 masks that have been rationed for health professionals.
This content was originally published here.