'Shovel ready' projects aim to get money working fast
What does President-elect Barack Obama mean by "shovel ready"?
The term, which he has been using to describe projects he favors for the stimulus spending package, refers to projects that are already designed and permitted and able to break ground within three to four months. He has also insisted on "use it or lose it" provisions that would take the money back if it's not put to work quickly.
Why all the rush? The biggest challenge for stimulus spending is getting money into the economy quickly, according to economists. Often, by the time such programs are enacted by Congress and put in place, the recession is over and a recovery underway.
Under the bill proposed by House Democrats last week, states, communities, and other recipients of stimulus grants must use at least 50 percent of the money within a year after the bill becomes law and the rest within two years. Many economists expect the recession to last through most of this year, and unemployment to rise into 2010.
A recent study for the Alliance for American Manufacturing, a coalition of manufacturers and the United Steelworkers union in Washington, estimated that for every $1 billion spent on transportation, energy, and other infrastructure projects, 18,000 jobs would be created. Spending about $150 billion a year over the next five years would create 2.6 million jobs, including about 250,000 in manufacturing, according to the study conducted by researchers at the University of Massachusetts' Political Economy Research Institute.
While it's important to get money into the economy quickly, the nation shouldn't lose sight of the long-term benefits of modernizing transportation, energy, communications, and other systems, even if it takes more time to get projects underway, said Robert Pollin, UMass economics professor and an author of the study.
"We've neglected infrastructure for a generation," he said. "You really can't spend too much money on it." 