Barack Obama has proposed the largest public works program since FDR. (Photo: Getty Images)
Washington - President-elect Barack Obama promised Saturday to create the largest public works construction program since the inception of the interstate highway system a half century ago as he seeks to put together a plan to resuscitate the reeling economy.
With jobs evaporating and the recession deepening, Mr. Obama began highlighting elements of the economic recovery program he is trying to fashion with Congressional leaders in hopes of being able to enact it shortly after being sworn in on Jan. 20. His address on Saturday followed the report on Friday indicating that the country lost 533,000 jobs in November alone, bringing the total number of jobs lost over the past year to nearly 2 million.
Mr. Obama's remarks showcased his ambition to expand the definition of traditional work programs for the middle class, like infrastructure projects to repair roads and bridges, to include new-era jobs in technology and so-called green jobs that reduce energy use and global warming emissions. "We need action - and action now," Mr. Obama said in an address broadcast Saturday morning on radio and YouTube.
Mr. Obama's plan, if enacted, would be in part a government-directed industrial policy, with lawmakers and administration officials picking winners and losers among private projects and raining large amounts of taxpayer money on them.
It would cover a range of programs to expand broadband Internet access, to make government buildings more energy efficient, to improve information technology at hospitals and doctors' offices, and to upgrade computers in schools.
"It is unacceptable that the United States ranks 15th in the world in broadband adoption," Mr. Obama said. "Here, in the country that invented the Internet, every child should have the chance to get online."
President Bush and many conservative economists have opposed such large-scale government intervention in the economy because it supports enterprises that might not survive in a free market. That is the crux of the argument against a government bailout of the auto industry.
But Mr. Obama proposes to charge ahead, asserting that extensive government support is needed to preserve and create jobs while building the latticework of a 21st century economy.
Although Mr. Obama put no price tag on his plan, he said he would invest record amounts of money in the vast infrastructure program, which also includes work on schools, sewer systems, mass transit, electrical grids, dams and other public utilities. The green jobs would include various categories, including jobs dedicated to creating alternative fuels, windmills and solar panels; building energy efficient appliances, or installing fuel-efficient heating or cooling systems.
Paul Bledsoe, a former Clinton White House energy adviser, said that Mr. Obama had now settled whatever debate there was in his transition team and among Democrats in Congress over how to lift the economy in the short term and over a longer horizon.
"It's now clear that Obama intends to stimulate the economy through large direct government spending on infrastructure projects as well as through business and individual tax cuts," said Mr. Bledsoe, now an official of the National Commission on Energy Policy, a nonpartisan research group in Washington. "He is advocating things like guaranteeing every American a college education, wiring the entire country for Internet, putting in a smart electric grid. If he can do it, these will be major systemic advantages for the United States in the competitive global economy."
Although Mr. Obama is weeks away from taking office, Friday's grim jobs report heightened pressure on him to assert leadership before his inauguration.
Mr. Obama and his team are working with Congressional leaders to devise a spending package that some lawmakers suggest could total $400 billion to $700 billion. Some analysts forecast even higher costs. Mr. Obama has said he would direct his team to come up with a plan to save or create 2.5 million jobs in the first two years of his administration.
A big part of that will be public works spending. "We will create millions of jobs by making the single largest new investment in our national infrastructure since the creation of the federal highway system in the 1950s," Mr. Obama said. He did not estimate how much he would devote to that purpose, but when he met with the nation's governors last week, they said the states had $136 billion worth of road, bridge, water and other projects ready to go as soon as money became available. They estimated that each billion dollars spent would create up to 40,000 jobs.
Local and regional transit systems have $8 billion more in projects that could begin immediately, like buying hybrid buses and expanding light rail systems, creating thousands of jobs.
"He hasn't given us any commitment, but we are fairly certain it's going to be large," Gov. Edward G. Rendell of Pennsylvania, a Democrat and chairman of the National Governors Association, said in an interview Saturday. "I think he understands if you're trying to reverse the economy and turn it around, this is not the time to do it on the cheap. This is not the time to do it in small doses."
Mr. Bush and other Republicans have resisted such an approach in part out of concern for the already soaring federal budget deficit, which could easily hit $1 trillion this year. Borrowing hundreds of billions of dollars today to try to fix the economy, they argue, will leave a huge bill for the next generation.
Conservative economists have also long derided public works spending as a poor response to tough economic times, saying it has not been a reliable catalyst for short-term growth and instead is more about politicians gaining points with constituents.
Alan D. Viard, an economist at the American Enterprise Institute, told the House Ways and Means Committee recently that public works spending should not be authorized out of the "illusory hope of job gains or economic stabilization."
"If more money is spent on infrastructure, more workers will be employed in that sector," Mr. Viard added. "In the long run, however, an increase in infrastructure spending requires a reduction in public or private spending for other goods and services. As a result, fewer workers are employed in other sectors of the economy."
Mr. Obama implicitly tried to counter such arguments by invoking the federal interstate highway program, seen as one of the most successful public works efforts in American history.
President Dwight D. Eisenhower signed the Federal Aid Highway Act in 1956, ultimately resulting in the construction of 42,795 miles of roads. In 1991, the government concluded that the total cost came to $128.9 billion, with the federal government paying $114.3 billion and the states picking up the rest.
Mr. Obama also responded to criticism of waste and inefficiency in such programs by promising new spending rules, like a requirement that states act quickly to invest in roads and bridges or sacrifice federal money.
"We'll measure progress by the reforms we make," Mr. Obama said, "and the results we achieve by the jobs we create, by the energy we save, by whether America is more competitive in the world."
The green jobs portion of the economic package could run as high as $100 billion over two years, according to an aide familiar with the discussions.
A blueprint for such spending can be found in a study financed by the Political Economy Research Institute at the University of Massachusetts and the Center for American Progress, a Washington research organization founded by John D. Podesta, who is a co-chairman of Mr. Obama's transition team.
Daniel J. Weiss, an environmental analyst at Mr. Podesta's center, said Washington should invest more money in existing programs that create work while cutting energy use, like home weatherization programs that have been chronically underfinanced.