Two Can Play the Bailout Blacklist Game

For a week Congressional Democrats have been playing the inclusion game, refusing to back the COVID19 stimulus bill unless it includes a laundry list of pork, special preferences, mandates or policy changes unrelated to the immediate crisis but which promote their partisan ends. Suddenly, this morning, we see them shifting to the exclusion game, in which the power to dispense aid will be used to punish or penalize companies or industries not in the party's good graces.

And perched atop the left's COVID bailout backlist, to no one's surprise, are any ventures or businesses connected to President Trump.   

So, virtually everybody else in the country might qualify for help -- a bailout, if you will -- but any COVID19-impacted businesses connected to President Trump can go bankrupt and go to hell: Is that the vindictive game these plunderers and pirates are now playing?

Okay, so let's play the bailout blacklist game. And let's play it by bipartisan rules.  

Let's also go through the vast investment portfolios of Chuck Schumer, Nancy Pelosi and other members of the Congressional Millionaires Caucus; let's go through their campaign donor lists; let's look at the major employers in their states or districts. Then we'll prohibit federal assistance from going to any companies or industries in which they have in investment stake, or which have a history of supporting them politically. That should bring this nasty little game of stick-it-to-Trump to a halt.

Senator Schumer Wednesday morning denied this was designed to target Trump, claiming, in his usual unctuously phony fashion, that it would apply broadly, to any companies in which members of the executive or legislative branches have "majority control." But since most Congressional lifers don't own or directly control businesses, and wouldn't know the first thing about starting or running a business -- their forte is destroying businesses -- this prohibition in fact would apply to a very, very small group of political leaders.

You can further shrink that group by looking at the businesses or industries they're in. The hotel and hospitality industry obviously is poised to take a major hit. It likely will be high on the list of industries needing aid. And how many people in the legislative or executive branch have "majority control" over hospitality companies?  Hmm. Let me think. I'll come up with somebody.

Political journalists obviously knew who Democrats were gunning for. So who does Schumer think he's fooling?           

We have to be thoughtful, selective and hard-nosed about where we target assistance. Not every company or industry in the country can get a bailout. There's just not enough money in the world for that. But when making those decisions, it strikes me as wrong to arbitrarily discriminate against a Trump-connected enterprise that otherwise qualifies for assistance. If the aid criteria are intelligently crafted -- that's a huge if -- and if the process is applied fairly and equitably -- that's another huge if --  shouldn't Trump-related businesses that meet the standard also be covered? 

Or are the people who work in or for this subset of businesses -- it's those people we're supposedly trying to help, right? -- unworthy of the same help other American workers will get, just because they happen to wait tables or clean rooms at the restaurant or hotel connected to the Trump business empire? Democrats obviously want to destroy Trump, not just politically but personally; that's been their Ahab-like obsession since he unceremoniously tossed them out of power. But who they're really punishing with such vindictiveness are thousands of rank-and-file workers who just happened to fill out a job application at the Trump-owned business, but now find themselves in one party's crosshairs through guilt by association.   

This Trump rage is so unhinged and irrational that it ought to qualify as a new mental disorder.While we're on a crash program to develop new vaccines, why not a vaccine that addresses this psychological problem? Seriously. We'll badly need one -- and the medical lab that brings a cure to market will make millions -- if Trump wins reelection this fall.

The COVID Recovery Will Require a Continuous War on Red Tape

Here's some welcome news. I love to see the productive sector (i.e. private sector) swinging into action in response to the coronavirus crisis. But why is federal permission needed before private companies can start cranking-out respirators or any other pieces of medical equipment? And how does that square with our boasts about being a "free country"? 

It's encouraging to see President Trump clearing-away the massive knot of red tape (much of it outdated, unnecessary or just plain asinine) that normally anchors down the US economy. But why does most of this red tape exist? What purpose (aside from empowering bureaucrats and keeping lawyers and the compliance officers busy) does it serve? And do we still need it? Aren't these questions we ought to be asking not just when the shit hits the fan, but when normalcy prevails?

Just imagine what we could accomplish -- just imagine how much more dynamic and responsive the US economy would be -- if we could make these emergency measures permanent once the crisis passes. Trump has had unheralded success in his first term slicing and dicing red tape. It's a story that doesn't get told because the press and pundits would prefer to focus on the tweets and the gaffes and the "unpresidential" antics. And the economy was strongly responding until the outbreak occurred. 

We'll need much more regulatory relief in order to speed the post-COVID recovery. We'll need to continue emergency rules reductions after the human health crisis wanes and we turn our attention to saving and restoring our economic health.

No one other than Trump has the steel stones necessary to throw out the old rule book and rein-in the regulatory superstate. This is where his brashness, bravado and take-no-prisoners attitude become assets, not liabilities. Can anyone imagine a regulation-worshipping liberal like Bernie or Biden doing that? I can't.

Keynes to The Kingdom

Robert Samuelson, a writer I admire, sees Keynesianism in eclipse, but I'm not sure we should nail down the coffin lid just yet. I thought Keynes was confirmed dead years ago, only to see him resurrected with relish, ala Vlad the BigSpender, after the housing bubble burst and this President was elected.

Just a few years ago, before the Bush/Obama bailouts and spending binges drove the economy further into the ditch, exposing the limits of government pump priming, the Left was gleefully declaring Adam Smith dead. Markets had once again failed us, they said. Keynesianism is the way to go.

Now Keynes is being pulled off his pedestal and replaced by. . . . well, we still haven't figured that out. Keynes will not die, or even rest, until statists concede that government kills far, far more jobs than it "creates." And that, I'm coming to believe, is a religious position, over which reason and fact have no bearing.

Paige on Porkulus

Sister Leslie was on Fox Business News today, highlighting some of the most stupid and wasteful spending items in Obama's porkulus package. No need to analyze or editorialize: She can speak for herself: link

The Law of Unintended Clunkequences

The mark of the economically-literate person is an ability to see a few levels below the immediate surface of an event or policy -- to understand, for instance, that every government intervention in the market sets off a series of ripples and reverberations, like a pebble breaking the surface of a placid pond. Some of these effects are more obvious than others, but all have consequences. They might benefit certain parties, but harm others. They might enrich one group, at the expense of another. The beneficiaries may be obvious, while the victims are hidden from view.

The key is trying to see things whole – or as whole as one can with something as complex as an economy. Perhaps the best writing on the subject was done by Frederic Bastiat, in his essay on "what is seen and what is not seen": link. Every American who aspires to economic literacy should read it.

It’s impossible to anticipate with precision what all those ripple effects will be (thus the folly and danger of central planning). But a prudent person at least counsels caution when it comes to government meddling, since it could result in more negative than positive consequences. A wise person has the humility to hold back.

A local story about the after effects of the federal Cash for Clunkers program offers a good case in point.

The immediate, surface impact of the program seemed positive. Americans flocked to take advantage of the giveaway, happy to have the government (meaning other people) subsidize their new car purchases. Dealers were delighted to get the showroom traffic. And all the transactions that took place, as $3 billion in federal money was blown in just a few weeks, did give a measurable (but modest and temporary) boost to one sector of the economy. That’s about as far as some people could (or cared to) see. And what they saw made them happy.

But one consequence of taking so many used cars off the market so abruptly is that a shortage was created, which is driving up the costs for used car seekers. Reports the Gazette:

“Several car dealers in Colorado Springs are reporting sharp price hikes and a drop in availability of affordable used cars on the wholesale market in the wake of the federal government’s Cash for Clunkers program and the financial turmoil in the new-car industry.

The dealers said the effects are — or will soon — be visible on a car lot near you, in the form of slimmer selections and higher prices.

One dealer said every late-model used vehicle he’s seen lately on the wholesale market is $2,000 to $3,000 higher than it would have been a month ago.

The Cash for Clunkers program paid $2.87 billion to scrap 690,114 gas-guzzling cars and trucks, according to the latest statistics. The number of cars turned in on new car trades in Colorado was not disclosed, but the feds spent $37.6 million in the state. Each trade-in was worth either $3,500 or $4,500, so if those rebates are averaged out, that suggests about 9,400 used cars were taken off Colorado roads last month. Some of those presumably would have gone to the used car market if the program hadn’t existed.

In addition, the program came at a time when many new-car dealers were beefing up their used-car stock because of slow new-vehicle sales. At the same time, some dealers who lost their factory franchises have been converting to used-car shops, and they’ve been scouring the country for good used vehicles for their lots.”

C4C may have been a one-time boon for Americans wanting to trade in a “clunker” for something new and marginally more efficient. But it’s becoming a bust for Americans who want to get a better “clunker” than what they're driving now. Federal splurging reduced car costs for some Americans, but increased them for others. New car dealers got a temporary booster shot, but used-car dealers have now come down with a terrible cold. One sector of the economy felt a bump; another experienced a slump. And whether the economy as a whole is better off is doubtful.

What economic-illiterates hailed as a "success," prudent people recognize as a case of shell game economics, in which money was taken from one set of pockets and transferred to another. The flurry of activity did nothing to nourish and actually grow the economy; it gave us a short-term sugar buzz from which we're now coming down.

But not to worry. We'll soon be hearing this described by politicians as "the used car cost crisis," prompting calls for another government intervention, to fix a problem created by the earlier intervention. And so it goes, ad infinitum, one government blunder inviting another -- as we ride the fast lane toward a centrally-planned economy.

Local "Stimulus" Gets Same Response

The excruciatingly-"progressive" mountain burg of Basalt, Colorado, recently gave small-scale Obamanomics a try, by launching a local economic stimulus program that, just like its federal counterpart, robs Peter to pay Paul. And it's worked no better than the federal stimulus plan, according to The Aspen Times -- meaning not very well. Yet local officials, just like their Treasury Department doppelgangers, claim the effort wasn't in vain, using the "it-might-have-been-worse" line of "reasoning."

The town's sales tax revenues are down 12.7 percent over last year, with all major sectors of the local economy taking hits. Grocery store sales were down 10.25 percent; sales at restaurants and bars fell by 29.4 percent; general retail was off 41.3 percent. This despite the town's stab at small-scale economic stimulus.

Reports the Times:

"Town officials had already expressed disappointment after June that Basalt's own stimulus program didn't spur more business. The town funded a program that offered $30 gift certificates to shoppers for each cumulative $300 they spent at participating shops and restaurants.

By one measure, the program was a success. The town awarded 2,500 gift certificates and spent $75,000 to honor them. Despite that success, sales tax revenues fell 17 percent in June. [Town finance director] Tippetts said she believes the program was worthwhile even if it didn't keep sales on par with last year. Without the program, this summer might have been even tougher on shops and restaurants, she said."

Local politicos fall into the same trap federal politicos do, by measuring the "success" of a government initiative not by whether it had the intended benefit, but by how many people took advantage of it. Give away gift certificates, paid for with other peoples' money, and you'll find willing recipients. No shock there. If that's your measure of success, pat yourselves on the back.

But all you're doing is moving money from one set of pockets to another, and tinkering at the edges of an economy, as the lackluster results in Basalt and elsewhere show. Obamanomics, on the small and large scale, is a shell game, which creates the illusion of economic growth. But only through increased productivity and risk-taking and value-creation can you actually "stimulate" -- meaning "grow" -- an economy. Otherwise, you're just handing out gift certificates, paid for with other peoples' money.

Obamanomics in Action

I've blogged before on the fact that much of Barack Obama's so-called economic stimulus package is actually a supplemental government spending bill, designed to grow federal agencies and pad federal budgets rather than boost private sector jobs. This recent news story confirms it.

Former Colorado Senator and now-Secretary of Interior Ken Salazar just unveiled some of his stimulus spending priorities. But how they will boost the economy at large is mystifying, unless Salazar is pushing a full employment program for seismologists, geologists and biologists. Here are some of Salazar's "recovery act" spending priorities, all of which benefit the U.S. Geological Survey, as listed by GovExec.com:

$15.2 million to modernize equipment at volcano observatories

$14.6 million to upgrade 7,500 stream gauges

$14.6 million to remove cableways, groundwater wells and stream gauges no longer needed to make sites safer for the public and support local economies

$29.4 million to address deferred maintenance at laboratories and make them more energy efficient

$29.4 million to modernize the Advanced National Seismic System

$17.8 million to improve wildlife and environmental research centers in Maryland, Missouri and Wisconsin

$14.6 million to improve imagery mapping used for emergency operations, natural resource management and flood control

$488,000 to the USGS Bird Banding Laboratory to digitize and publicize bird banding data, which has applications in disease research

Wow. Can you imagine the economic shot in the arm America will get when our volcano observatories take delivery of all that cool new equipment! Laugh if you like, but volcano observatories serve as an under-appreciated cornerstone of the American economy. And even though nothing they do can accurately predict volcano eruptions, or prevent them from happening, just knowing that these facilities are there, monitoring volcanoes and serving as a place for grad students to hang out, is reassuring.

And how about Salazar's upgrading of stream flow gauges? Don't tell me that won't come as a relief to stream flow gauge salesman everywhere. Just the other day I noticed that another "Gauge Mart" had closed. Hopefully this will put an end to that.

Wildlife research centers are also critically important to the U.S. economy, and a prime generator of good-paying wildlife research center jobs, which we neglect at our peril. So it's good to see Salazar is addressing the wildlife research center slump we've been in.

Finally, the half million dollars for the USGS Bird Banding Laboratory is sure to come as welcome news to the 67,000-member American Brotherhood of Bird-Banders (which endorsed Barack Obama for president and donated heavily to his campaign, just coincidently). Too many bird-banding jobs have been outsourced to other countries. It's time we brought more of those jobs back home. Our economic security depends on the maintenance of a domestic bird-banding capability. This is obviously a wise use of stimulus dollars.

Actually, it's all just an obvious administration ploy to boost agency spending, for things that ought to be funded through the normal appropriations process. It's not what most Americans had in mind when the measure was passed. It makes a mockery of the idea that the goal is economic recovery. And it confirms that Obamanomics, Keynes on steroids, recognizes no distinction between the private and public sectors.

Only bird brains would spend economic stimulus funds on bird banding.

Will Obama "spendathon" kill welfare reform?

Watching events unfold in a refreshingly detached fashion, from "across the pond," yesterday's Sunday Times had a story angle on Barack Obama's stimulus bill I haven't yet seen -- explaining that the massive infusion of money to the states will obliterate, and probably reverse, gains made in the area of welfare reform since the mid-1990s.

The story goes beyond the bill's possible implications for welfare reform, however, pointing out that, despite having successfully muscling the bill through Congress, Obama is making the sort of missteps a relative novice might be expected to, and that even backers of the president's plan seem to be harboring doubts about whether it's the right medicine for an ailing economy.

It's the sort of reporting one isn't yet getting from the American media, which still seems too bedazzled by Obama's star power.

Here are the highlights:

Obama warned over ‘welfare spendathon’

The new administration's economic stimulus plan may undo reforms that cut the dole queues, critics say

RONALD REAGAN started it, Bill Clinton finished it and last week Barack Obama was accused of engineering its destruction. One of the few undisputed triumphs of American government of the past 20 years – the sweeping welfare reform programme that sent millions of dole claimants back to work – has been plunged into jeopardy by billions of dollars in state handouts included in the president’s controversial economic stimulus package.

As Obama celebrated Valentine’s Day yesterday with a return to his Chicago home for a private weekend with family and friends, his success in piloting a $785 billion (£546 billion) stimulus package through Congress was being overshadowed by warnings that an unprecedented increase in welfare spending would undermine two decades of bipartisan attempts to reduce dependency on government handouts.

Robert Rector, a prominent welfare researcher who was one of the architects of Clinton's 1996 reform bill, warned last week that Obama’s stimulus plan was a “welfare spendathon” that would amount to the largest one-year increase in government handouts in American history.

Douglas Besharov, author of a big study on welfare reform, said the stimulus bill passed by Congress and the Senate in separate votes on Friday would “unravel” most of the 1996 reforms that led to a 65% reduction in welfare caseloads and prompted the British and several other governments to consider similar measures.

Though some researchers have questioned the true impact of Clinton’s “workfare” reforms, they were wildly popular with millions of US taxpayers tired of subsidising what many saw as a generation of slackers.

Despite dire warnings that reduced benefits for single mothers and deadlines on entitlement would create a social calamity – one liberal senator warned at the time that children would be “sleeping on grates” – the 1996 reforms cut welfare rolls from more than 5m families in 1995 to below 2m a decade later without a discernible increase in hardship . . .

. . . .Rector, a senior scholar at the conservative Heritage Foundation, argued that Obama’s spending proposals in effect encouraged individual states to add more families to their welfare rolls; the more Americans sign on to the dole, the more state budgets will benefit from US Treasury payouts. “They have completely overturned the fiscal and policy foundations of welfare reform,” Rector complained . . .

. . . While some scholars are beginning to suspect that Clinton’s welfare reforms were fatally flawed – or at least viable only during an economic boom – Republicans are not alone in fearing that Obama’s hastily concocted package is the first step towards the creation of a quasi-socialist welfare state.

Even Mickey Kaus, a prominent liberal blogger, has denounced what he describes as the “get more people on welfare” provisions of Obama’s bill. Writing at Slate, the political website, Kaus said: “Lack of jobs isn’t a reason to loosen work requirements . . . Have the Dems never heard of ‘workfare’?

“Give recipients useful community service work, and if they do the work, then they get the [welfare] cash.”

The paper notes that Obama's polling numbers remain strong, despite a series of gaffes, including those involving cabinet picks, which led the new president's chief of staff, Rahm Emanuel, to deny that it was “amateur hour” at the White House. But "the dangers are beginning to pile up for the novice president and his struggling economic crew," according to the Times, as the unprecedented scope of the "rescue" plan clashes with America's latent skepticism about big-government solutions, which tend to be wasteful and ineffective.

"In Wisconsin, the state that forged a pioneering path in welfare reforms in the 1990s, residents were astonished by a newspaper investigation that disclosed that a $340m (£236m) programme offering taxpayer-financed child care to low-income working parents was riddled with fraud and expensive loopholes.

In one case, a family of four sisters who had 17 children between them put all of them together, took it in turns to babysit them and over the past three years claimed $540,000 (£374,000) in perfectly legal state childcare subsidies.

Examples like that fuel American suspicion that so-called “big government” invariably turns out to be inefficient, expensive and easily exploitable. And there has been no bigger government action in the US than the stimulus package presented by Obama."

Average Americans seem genuinely conflicted over the stimulus package, torn between their fear that even worse might occur without dramatic government action (a feeling nurtured, ironically, by a president who only weeks ago was preaching the virtue of "hope" over "fear") and their recognition that a government "rescue" also carries huge risks, in terms of wasted money and expanded government power. But now we'll never know whether doing much less, in terms of government intervention, would have been better in the long run.

The dye is cast, as they say. And it's the color of red ink.

Federal Agencies will Fatten-up on "Stimulus Package" Pork

The "economic stimulus package" Democrats are streamrolling through Congress, in a rush to make a rendezvous with Barack Obama on one of his first days in office, evidently will also serve as a stealth federal spending bill, with tens of billions of dollars going to fatten the coffers of federal agencies. GovExec.com dug into the bill and produced the following list of agency goodies, all tucked neatly away inside -- expenditures that should be funded as part of the normal budgeting and appropriations process.

President-elect Obama vowed that this would be an earmark-free bill, understanding that Americans would be even more repulsed by the glut of spending if members of Congress began piling their pet projects even higher on the gravy train. There are many definitions of "pork," however, and many different ways to serve it up. And this certainly has that tell-tale aroma.

Here's the report from GovExec.com. Read it and weep.

Stimulus package contains billions of dollars for federal agencies

By Katherine McIntire Peters kpeters@govexec.com
January 15, 2009

Federal agencies stand to gain billions of dollars in funds if the economic stimulus package under consideration in Congress becomes law.

According to a summary of the 2009 American Recovery and Reinvestment Bill released on Thursday by the House Appropriations Committee, agencies would receive billions to repair and rebuild infrastructure, upgrade computer systems, repair environmental damage and improve energy efficiency. Billions more would be funneled through agencies to states and local governments in the form of grants. The following federal agencies would receive funds to directly enhance their facilities and operations:

Agriculture Department

$650 million for construction and improvements at National Forest Service facilities
$209 million for deferred maintenance at Agricultural Research Service facilities
$245 million to critical information technology improvements at the Farm Service Agency
$44 million to repair and improve security at USDA headquarters
$300 million for fire hazard reduction
$400 million for watershed improvement programs at the Natural Resources Conservation Service

Centers for Disease Control and Prevention

$426 million to complete the agency's buildings and facilities master plan, and to renovate the National Institute for Occupational Safety and Health offices

Defense Department

$350 million for research into using renewable energy to power weapons systems and military bases
$3.75 billion for new construction of hospitals and ambulatory surgical centers
$455 million in renovations to medical facilities
$2.1 billion for repairs to military facilities
$1.2 billion for new housing construction
$154 million to improve troop housing
$360 million for new child development centers
$400 million for new construction to support Guard and Reserve units
$4.5 billion for the Army Corps of Engineers for environmental restoration, flood protection, hydropower and navigation infrastructure (the committee noted the Corps' construction backlog is $61 billion)
$300 million to clean up closed military installations

Energy Department

$1.9 billion for basic research
$400 million for the Advanced Research Project Agency-Energy
$500 million for nuclear waste cleanup

Environmental Protection Agency

$800 million for hazardous waste cleanup at Superfund sites
$200 million to clean up leaking underground storage tanks
$100 million for competitive grants to clean up former industrial sites known as brownfields

General Services Administration

$6.7 billion for renovations and repairs to federal buildings, including at least $6 billion focused on increasing energy efficiency and conservation
$600 million to replace older vehicles with alternative-fuel vehicles

Health and Human Services Department

$900 million to prepare for pandemic flu, support medical countermeasures for weapons of mass destruction and cybersecurity

Homeland Security Department

$500 million for the Transportation Security Administration to install aviation explosive detection systems at airports
$150 million for the Coast Guard to repair or remove bridges deemed hazardous to marine navigation
$1.5 billion to construct GSA and Customs and Border Patrol land ports of entry to improve security and commerce

Housing and Urban Development Department

$2.5 billion for a new program to upgrade low-income housing to increase energy efficiency

Interior Department

$1.8 billion for the National Park Service for infrastructure projects
$325 million for the Bureau of Land Management for infrastructure projects
$300 million for the National Wildlife Refuges and National Fish Hatcheries
$400 million to address deterioration of the National Mall
$500 million to the Bureau of Reclamation to provide clean drinking water to rural areas (the committee noted the bureau has a backlog of more than $1 billion in rural water projects)
$500 million to the Bureau of Indian Affairs to address maintenance backlogs at schools, dams, detention and law enforcement facilities, and roads (the committee noted the bureau has a maintenance backlog at schools alone exceeding $1 billion)
$550 million to modernize facilities at the Indian Health Service

NASA

$600 million, including $400 million to put more scientists to work on climate change research, $150 million for research to improve aviation safety and Next-Generation air traffic control, and $50 million to repair NASA centers damaged by hurricanes and floods last year

National Institutes of Health

$2 billion, including $1.5 billion for expanding jobs in biomedical research and $500 million to implement the repair and improvement strategic plan developed for NIH campuses
$1.5 billion for NIH to renovate university research facilities

National Institutes of Standards and Technology

$300 million for competitive construction grants for research buildings at colleges and other organizations, and $100 million to coordinate research at labs and national research facilities by setting interoperability standards for manufacturing

National Oceanic and Atmospheric Administration

$600 million for satellite development and acquisitions
$400 million for habitat restoration projects

National Science Foundation

$3 billion, including $2 billion for expanding employment opportunities in science and engineering to meet environmental challenges and improve economic competitiveness, $400 million to build major research facilities, $300 million for equipment, $200 million to repair and modernize facilities, and $100 million to improve instruction in science, math and engineering

Social Security Administration

$400 million to replace the 30-year-old National Computer Center
$500 million to process a steep rise in disability and retirement claims

State Department

$276 million to upgrade information technology platforms

U.S. Geological Survey

$200 million to repair and modernize science facilities and equipment

Veterans Affairs

$950 million for medical facilities (the committee noted there is a $5 billion maintenance backlog at the agency's 153 facilities)
$50 million to make monument and memorial repairs at veterans cemeteries

Stimulus and Response

If there's going to be an orgy of federal "infrastructure spending," as a means of stimulating the economy, let's at least spend the money smartly, argues Joel Kotkin in this sensible piece in today's Washington Post. "Don't just stand there, spend something" seems to have become the consensus economic recovery strategy in Washington, all too conveniently. "Subsidy-side economics" might best describe Obama's program. But Kotkin argues that we should forego flashiness and fads, opting for practicality over pie-in-the-sky, if we want to get the most bang for our bucks.

I hope some of president-elect Obama's advisors are reading The Post this Sunday.

Make Sure All That Spending Is Well Supported
By Joel Kotkin

It's the new buzzword: infrastructure.

President-elect Barack Obama has promised billions in infrastructure spending as part of a public works program bigger than any since the interstate highway system was built in the 1950s. Though it was greeted with hosannas, his proposal is only tapping into a clamor for such spending that's been rising ever since Hurricane Katrina hit New Orleans in 2005 and a major bridge collapsed in Minneapolis last year. With the economy now officially in recession, the rage for new brick and mortar is reaching a fever pitch.

But before we commit hundreds of billions to new construction projects, we should focus on just what kind of infrastructure investment we should -- and shouldn't -- be making. More important, we should think beyond temporary stimulus and make-work jobs and about investments that will propel the economy well into this century.

After all, it's not that we stopped spending on infrastructure over the past decade. It's that mostly, we haven't spent on the right things.

New York City, for example, has wasted billions on its bloated bureaucracy and on constructing new sports stadiums and other ephemera deemed necessary to maintain Mayor Michael Bloomberg's "luxury city." Meanwhile, many of its subway and rail lines have deteriorated. Over the decades, brownouts and blackouts, caused in part by underinvestment in energy infrastructure, have become common during periods of high energy use in the summer.

Similarly, California Gov. Arnold Schwarzenegger has extolled the Golden State as "the cutting-edge state . . . a model not just for 21st-century American society but the world." Yet California's once envied water-delivery systems, roadways, airports and schools are in serious disrepair.

Many even more hard-pressed communities -- Cleveland, Pittsburgh, Philadelphia, Baltimore
and New Orleans -- have similarly wasted limited treasure on spectacular new convention centers, sports arenas, arts and entertainment facilities and hotels while allowing schools, roads, ports and other critical sinews of economic life to fray.

Convention centers and other tourist attractions create reasonably high-paying construction jobs in the short term, but over time, they create an economy dominated by lower-wage service jobs. Take New Orleans. It was once one of the nation's great industrial and commercial centers. But then the city turned its back for decades on its diverse economic base and invested not in levees, port development and basic infrastructure but in the arts, culture and tourism. The tourism and convention business surged, but the result was a low-wage economy. Nearly 40 percent of New Orleans households, or twice the national average, earned less than $20,000 a year in 2000.

Other places have followed a similar trajectory of folly, heavily subsidizing luxury condominiums, restaurants and other amenities to help lure the so-called creative class. Michigan Gov. Jennifer Granholm's 2003 plan to turn her state around focused on creating "cool cities" aimed at attracting hip, educated workers to Detroit and other failing urban centers. Instead of sparking an economic revival, Granholm has presided over a mass exodus of younger workers who can't find jobs in her state.

Perhaps no place epitomizes misplaced priorities better than Pittsburgh. Widely hailed in the media as a poster child for the urban "renaissance," Pittsburgh has suffered a precipitous decline in population: Its 310,000 residents are less than half its 1950 peak. It now shares with parts of the former East Germany the gloomy demographic of having more residents die each year than are born.

Like other cities, Pittsburgh has sought to revive itself with billions in new stadiums, arenas and cultural facilities. Meanwhile, its roads and bridges are in a constant state of disrepair. Most recently, the city embarked on a scheme to create a 1.2-mile, $435 million transit tunnel under the Allegheny River to connect downtown's heavily subsidized towers with taxpayer-funded pro sports stadiums and a new casino. This "tunnel to nowhere," derided by a local columnist as the nation's "premier transit boondoggle," will no doubt be the sort of thing many states and localities will seek federal infrastructure funds for, justifying them on the basis of both short-term economic stimulus and some kind of "green" agenda.

Although some new spending on efforts such as developing alternative fuels could improve efficiencies, many "green" projects seem destined to devolve into little more than expensive boondoggles. A recent program passed by the Los Angeles City Council, for example, calls on the city-owned utility's ratepayers to subsidize installing solar panels on office buildings. This plan, heavily promoted by labor lobbyists, mandates that the project be carried out by the

Department of Water and Power, whose employees are among the most well-paid public workers in the nation. By some estimates, it would raise the price of electricity by as much as 8 percent. But it will do nothing to slow the continued flight of industrial and other employment from Los Angeles or its suburbs.

A "red-green" tilt to infrastructure programs -- essentially marrying the labor and environmental lobbies -- also seems sure to raise spending on public mass-transit projects. Some transit or rail spending can, of course, promote efficiency and productivity. A significant incentive to increase rail freight, for example, could boost productivity in the critical manufacturing, agriculture and energy industries because rail can generally carry far more goods on less fuel than long-haul trucking.

Spending on upkeep of transit systems in older centralized cities such as New York, Washington and Chicago also seems logical. But with few exceptions -- the heavily traveled corridor between downtown Houston and the Texas Medical Center, for instance -- ridership on most new rail systems outside the traditional cities has remained paltry, accounting for barely 1 or 2 percent of all commuters. Such projects are almost absurdly expensive on a per-capita basis; the Allegheny Institute, a Pennsylvania think tank that pursues free-market solutions to local questions, estimates that the cost to the taxpayer of each trip through the new Pittsburgh tunnel could be as much as $15.

Infrastructure investment requires a strong litmus test. Where the cash goes should be determined chiefly on the basis of how the spending will enhance the nation's productive capacity and raise incomes across the board. This also means looking beyond traditional brick and mortar investments to critical skills shortages. Businesspeople nationwide complain repeatedly of a chronic shortage of skilled blue-collar workers and technicians. More than 80 percent of 800 U.S. manufacturing firms surveyed in 2005 reported "a shortage of qualified workers overall." Nine in 10 firms said that they faced a "moderate-to-severe shortfall" in qualified technicians.

In sharp contrast to sports stadiums and convention centers, programs in skills training for U.S.-based industries such as aerospace, energy, machine tools and agricultural equipment tend to create high-wage jobs, which have expanded over the past decade even as the overall number of industrial positions has declined. Many industrial companies are increasingly desperate for skilled workers and often consider locating wherever they can be found. These companies also produce many jobs that, though not located on the factory floor, are critical to the nation's competitive edge. For example, the Manufacturing Institute estimates that manufacturers employ one-fourth of all scientists and 40 percent of engineers.

A forward-looking infrastructure program would also target places that would most benefit from new roads, bridges, ports and other critical facilities, including underperforming regions such as the Great Plains, Appalachia and rural Pennsylvania, as well as the depressed Great Lakes area.

These areas offer cheaper labor and housing, prime locations and access to natural resources. Making them more accessible to markets and more energy efficient could replicate the great New Deal success in modernizing much of the South and West.

Perhaps most critical, we need to look at how to combine new physical investments with new initiatives in skills training, incubating small companies and promoting better ties with local universities and research facilities. This "infrasystems" approach has been implemented successfully in places as diverse as North Dakota's Red River Valley, the area around Wenatchee, Wash., and in various Southern locales such as Charleston and Savannah.

The call for more spending on infrastructure represents a unique opportunity to rebuild our productive economy and create long-term middle-class jobs. But if the effects are going to last, the trick is to concentrate on the basics and forget the flashy, feel-good kinds of projects that have characterized many "infrastructure" investments in recent years.

Joel Kotkin is a presidential fellow at Chapman University and executive editor of newgeography.com. He is finishing a book on the American future.