How Stimulus Spending Really Works

Megan McArdle posted a really informative breakdown of the infrastructure-improvement process today. This is pretty telling because it sort of demonstrates that some of the programs the President highlighted in his jobs speech had no realistic hope of happening in the next 12 months. This is probably why we also seem to be getting nothing but road resurfacing out of stimulus spending because they are the only true ‘shovel ready’ projects available. (I highlighted a key point at the bottom).

The schools refurbishing program that the President has proposed will be attractive to many, but it really isn’t going to create many jobs before the election, unless all they try to do is painting and spackling and floor refinishing. Those jobs are all labor intensive,but they are also specialized skills that not every unemployed blue collar worker possesses. . . .

So I figure as follows: for the contractor to be ready next July 1 to get as much as possible done during July and August, the contractor really has to be selected no later than May 1 for simple jobs, so the contractor will have 2 months to actually measure the site, order that which needs to be installed ,have it fabricated, and then delivered to the site. That is the bare minimum time. For anything that has a fabrication lead time or requires new electrical or plumbing or hvac lines, the time point at which the contractor has to be awarded the contract has to be pushed back.

For the contractor to be given the ‘ notice to proceed’ on May 1, so that ordering can begin, the low bidder has to be chosen on April 1, so all the background checks and paperwork can be done before the actual award of the contract and the notice to proceed is issued.

To select the low bidder on April 1, the bid packages have to be in final approval by March 1 at the latest,so that there can be site visits and prebid meetings and the like. In particular, all the asbestos and PCB inspections will have to be completed and any remediations programmed at that point.

The design professional preparing the bid package will have to be doing final design by January 15th, to assure that the bid packages are complete and all necessary reviews by the school board are done before the bidding period starts. More time will be needed if there are to be any public meetings on what is in the final design. Any hazardous material inspections will have to have commenced by this point.

To start final design, the design professional will have to have had the time to survey the school, measure the site and propose solutions to the problems encountered. So the design professional will have to be on board no later than December 1 to gain access to the school buildings during the holidays to do measurements and assess existing site conditions.

To start those things on December 1, the design professional will have to be selected in November by whomever wants to review that selection and approve it. So the start of the selection of the design professional will have to start in October or late September, since design professionals do not bid for their work, but propose.

But to select the design professionals, they have to make proposals on a scope of work. Developing that scope of work must start a month before the design professionals are asked to propose,and that scope may itself need to be reviewed by the school board and put into their priority list. So the scoping and priority setting process will have to start on September 1,2011 to assure that it gets done and through the school board process by the end of September.

The sum and substance is that the program for school renovations really should have started already. Since there is little chance that the President will have a real bill before the Congress until next week or later, and there is little chance that the Congress will act before the end of September, it is almost impossible to get anything done in the schools that is more than painting and floor refinishing next summer. And even that will conditioned on the hazardous materials inspections and abatements being successfully completed by the time that the contractors are bidding on the work. And just painting and floor refinishing, without replacing roofs and fixing leaks and improving the lighting, will just be like ‘ putting lipstick on a pig’,as the saying goes.

The school infrastructure work schedule is very compressed. But highway and bridge infrastructure work is not much less sensitive to very tight time schedules. Any delay in getting the bill passed is going to make it harder to do any real work next summer. Most of the low-design work, like resurfacing, was already done as part of the ARRA program. There are not a lot of designs hanging around on shelves and the feds have yet to figure out how to do low-design ,high manpower projects under the current eligibility criteria.

Americans Staying in the Suburbs

On vacation I finally got around to reading this 2010 piece from Joel Kotkin about settlement patterns in the U.S. Specifically Kotkin is talking about the ‘myth’ of Americans migrating back to the cities in large numbers.

Pundits, planners and urban visionaries—citing everything from changing demographics, soaring energy prices, the rise of the so-called “creative class,” and the need to battle global warming—have been predicting for years that America’s love affair with the suburbs will soon be over. Their voices have grown louder since the onset of the housing crisis. Suburban neighborhoods, as the Atlantic magazine put it in March 2008, would morph into “the new slums” as people trek back to dense urban spaces.

But the great migration back to the city hasn’t occurred. Over the past decade the percentage of Americans living in suburbs and single-family homes has increased. Meanwhile, demographer Wendell Cox’s analysis of census figures show that a much-celebrated rise in the percentage of multifamily housing peaked at 40% of all new housing permits in 2008, and it has since fallen to below 20% of the total, slightly lower than in 2000.

This study doesn’t really surprise me. I’m in my mid-thirties now and I hardly know anyone my own age that lives in the city. That’s not to say it is unpopulated but those that are living there seem to be overwhelmingly younger and hipper (I freely admit I am un-hip these days). The suburs are where couples come to raise families. There’s more elbow room, more reliable amenities and life is fairly quiet and predictable. That may sound boring to some but that predictability and comfort frees up a lot of energy for other pursuits. Readers know I am out here because it puts me a lot closer to the farms and fields that lift my soul. There’s also a small sense of feeling like a pioneer as we watch the area grow and become a city within a city.

Demographic trends, including an oft-predicted tsunami of Baby Boom “empty nesters” to urban cores, have been misread. True, some wealthy individuals have moved to downtown lofts. But roughly three quarters of retirees in the first bloc of retiring baby boomers are sticking pretty close to the suburbs, where the vast majority now reside. Those that do migrate, notes University of Arizona Urban Planning Professor Sandi Rosenbloom, tend to head further out into the suburban periphery.

This is true in my experience as well. I have several friends that have seen their parents move out into the more rural counties surrounding Louisville. It seems for so many the American dream is to get out into the country, buy ten acres and de-stress. An added benefit that I have talked about before is that a lot of these folks start hobby farms and help spread the diversification gospel in a state that desperately needs it.

A Whitehouse Rural Policy: Too Little, Too Late

From the Rural Blog

President Obama [recently] created a White House Rural Council, chaired by Agriculture Secretary Tom Vilsack, right, and made up of representatives from other agencies, mostly Cabinet-level. Vilsack called it “a truly historic moment for the nation and “an unprecedented commitment to rural America.”

In a conference call with reporters, Vilsack denied that the council was a response to Republican criticism of the administration’s policies on issues related to public lands in the West, and Interior Secretary Ken Salazar denied that it was created to enhance Obama’s chances for re-election. Both said the administration has been better for rural America than its predecessors, or at least some of them. “It has been a forgotten America,” Salazar said. Vilsack added, “We need to do a better job, obviously, of reminding folks of what’s been done,” which he also did in a White House Blog post.

President Obama has been in office for 2.5 years now. Why is this just coming around? According to the latest census 16% of Americans live in rural areas. By comparison blacks make up 12.2% of the population and Hispanics make up 16.3%. I think we can agree there has been more outreach to those communities. But of course the key difference may be the voting habits of those in rural areas.

Better late than never I guess but I don’t think we should hope for much.

Home as a Home

Megan McArdle has a great post up today at the New America Foundation where she discusses the home she purchased last July and the feelings she has about it now, despite the decline in its value:

Of course, we don’t know for sure. But right before the first-time homebuyer’s tax credit expired last spring, anyone who thought they might want to buy had plunged into the market, pushing up prices. The last of those purchases closed last June. So when we made our offer in July, we were working off those inflated valuations. Nine months later, we grimly watched similar houses sell for tens of thousands less than we paid.

…

Although I may spend odd moments cruising through the listings to see what neighboring houses have sold for, my husband and I agree on one thing: “Who cares? We’re not going to sell,” he said the last time I told him about a comparable house that sold for less than ours.

We didn’t buy our house for an investment; that’s what our investments are for. Our house is to live in. We bought mostly because we wanted to commit to a place, and to make it over to suit us exactly.

I have very similar feelings about the ‘dream house’ we bought just over a year ago. I say this as we prepare, in one week, to spend our spring break painting three rooms, installing new lights, tackling a mountain of neglected move-in tasks that were never completed…and hopefully have some fun in the process. Much like our old house this new one has become my constant obsession. For someone like myself that is project-oriented a big house that is good but not great (yet) is like heroin. I am additionally fueled by the annoyingly awesome couple over at Young House Love that just moved on to their second home and are tackling many of the same types of tasks.

At the end of the day the prime motivator has to be a desire to make your home into the place you want to feel most happy in. Homes as investments are always going to cause your decisions to be dictated by resale instead of personal preference. I have a friend who really, really wanted a huge walk-in shower in their one full bath but was made to feel terrible about the decision by a relative who believed a bath/shower combo had more resale potential. Thankfully she stuck to her guns and hasn’t regretted the decision.

Homes as investments is a curiously American phenomenon. The collapse of the housing market may have one positive effect in that it seems to be making people rethink that attitude.

Farm Subsidies as National Security

Jonathon Chait:

The other day, Agriculture Secretary Tom Vilsack called up Ezra Klein to protest Klein’s opposition to agriculture payments and other rural subsidies. The interview is a remarkably revealing. I knew the case for rural subsidies was weak, but I had no idea it was this weak. He argues for food subsidies because the U.S. needs to be self-sufficient in food, which is silly. (Who exactly is going to blockade our ports and starve us into wartime submission?)

I covered this topic way back in 2008 and I think the post still holds up today.  Food subsidies are about security and not just the security provided by self-sufficency.

A heavy dependence on foreign-produced crops creates two major security concerns. The first is obvious. Foreign produced food can be tampered with and at a high quantity of importation the likelihood that some would slip through our quality controls increases with each ton of food. This food is also subject to disease or a dramatic loss of production due to the inferiority of foreign production methods. In both cases our people risk exposure to health concerns and/or a loss of a major food source.

The second security risk is the potential for unfair trade pressures to be placed on the U.S. by countries supplying major amounts of our food. One need only look at the concessions we have had to make to our oil suppliers to realize the potential for even greater pressure when the alternative is starvation.

Rural Broadband

This is one way to get their point across (from the Rural Blog):

To demonstrate the speed of rural broadband in the United Kingdom, pigeons carrying tiny computer flash drives were released from a Yorkshire farm at the same time that a five-minute video upload was begun from the farm, reports the BBC. A little more than hour later, the pigeons had reached their destination in Skegness, about 75 miles away, while only 24 percent of the 300-megabyte file had uploaded.

Slow internet service is a problem that plagues rural areas in almost every Western nation. It’s a major problem as economies shift more and more towards information-based business models. Even those that don’t rely on information as their primary trade find the need for quick access to data increasingly important. Some progress has been made but it is far to slow and the income gap between urban and rural will only grow if this need is not addressed soon.

As an example of this problem I would advance my own line of work as one that is 100% information driven. The work that I do is completely dependent on the internet with cooperation between colleagues and myself across over a dozen states and even more cities. The flow of information is constant and without good internet service we would find ourselves unable to compete with other companies in our field. The good thing about our work is that it should mean that location is not a factor in finding the best employees for a team. We can recruit members from across the country with no need for a centralized hub. Without solid broadband though, the possibility that those team members will be from rural locales is small. Of our team I probably live in closest proximity to rural areas, but even still my home is within a city of nearly 1 million. Hardly a remote farm or small town.

The Importance of Farm Subsidies

From The Hand That Feeds (h/t Marion County Line)

The facts are these: U.S. farm policy helps stabilize U.S. farm production, and everything else follows a domino effect that helps not just us, but the world. Our farm safety net enables us to feed Americans, and send the rest of the food to other countries in need. As evidence, as of August 26, 2010, the Associated Press in Pakistan reported the U.S. had already sent $150 million in relief, including near $50 million worth of food.

As a country, we spend just 10 percent of our income on food and just 2.3 cents per meal on the farmers’ safety net. It’s a deal that works for everyone involved. Except the farm policy critics.

I love this quote because it perfectly covers my opinion on subsidies as well. I believe in capitalism and I believe in a free market but I’ve always felt that subsidies transcend economics. Our food supply is a matter of national security. If we give away our production to other countries (which is what will happen if subsidies are eliminated) then we give them an extraordinary amount of control over our country. We become vulnerable to trade pressure, shortages and possible embargoes.

There’s always a problem with cheap US food flooding foreign markets. It hurts foreign farmers but ultimately it feeds foreign children who are often hurt by poor farming practices in their own countries. I’ll take that trade-off.

Tobacco Production Declines on KY Small Farms

 

From the Rural Blog: 

The News-Journal.net reports that 15 years ago, Whitley County farmers produced about 800,000 lbs. of burley tobacco, much of it high quality. Today, it will produce about 10,000 lbs., all from the Prewitts’ farm. Whitley County has never been a big agricultural county but with the Cumberland River and some places on the Cumberland Plateau it was a good place to raise tobacco – until the federal program of quotas and price supports was removed, bringing economies of scale to the business of growing tobacco and moving it west, where larger tracts were available. “It’s a case of the bigger producers here in Kentucky are getting bigger and the smaller producers are just getting out of it completely,” University of Kentucky Agricultural Extension Agent Phil Meeks said to the News-Journal. “There are other things people are turning to, other things to diversify, but none of them really, alone, replace tobacco. … There have been a lot of families that, once they quit tobacco, just got out of farming altogether.” 

The loss of tobacco has been a hard hit to Kentucky’s small farms, of which there are many compared to other states. Our geography does not support large farms and tobacco was the way that small farmers could compete because of its high dollar value per acre. With the loss of tobacco there is no equivalent replacement. Diversification, mentioned above, is the solution that has been suggested for years by the Ag Dept and other farm experts. A lot of good work has been done in the state to both encourage farmers to try new things and to encourage retailers and average citizens to support these new ventures. One of my favorite programs has been freshwater prawns, which do offer a high dollar yield, though still not on par with tobacco. 

The cultural dynamic that both concerns me and also offers hope is the trend I have seen of long-time farmers who lose tobacco getting out of farming all together. In my opinion, having talked to some of them, this comes from a bit of stubbornness and also fear. They want to raise tobacco because that’s what their family does and they are scared to try anything new. I can understand their fears, with families to support, but there’s got to be a way to transition with less risk. So far, those who are willing to try this move are fewer than we would like to see. The area for optimism is in the small ‘hobby farms’ which are coming on-line. These are often first generation farmers, sometimes retirees, sometimes young entrepreneurs, who want to try farming and are energetic and open-minded enough to try anything. These are the folks who are driving the explosion of farmer’s markets and the artisan food movement. 

The final chapter of tobacco in KY is not too far off. It will be consolidated into a few big farms and the rest must adapt or disappear. I want o see them adapt, but the will to do so has to be there. My hope is that they will see the success of diversified operations and put their own know-how to work doing the same. 

Bridge Authority to Review 8664 Plan

Good news for the Louisville area.  8664 reports that the Bridges Authority will be reviewing the 8664 plan for the first time. They were motivated, at least in part, by a proposal from several design groups in St.Louis to remove I-70 in their downtown area.

Stay tuned for more news on this. The Ohio River Bridges Project has been one bad decision after another. Let’s hope they are finally taking a step in the right direction.

Where Do You Put a Mosque?

I decided to weigh in on the conversation about the proposed Islamic cultural center in NYC after participating in a short discussion about the subject on Facebook this weekend. Let me state clearly right at the start that I support the building of the center and it pains me that I seem to be splitting with many of my fellow conservatives on that point. One thing that is not unexpected in today’s media atmosphere is the way this entire issue has been branded. ‘The Ground Zero mosque’ is neither mosque nor at Ground Zero. Matt Sledge, writing for The Huffington Post

From 45 Park Place, the former Burlington Coat Factory building that will make way for the Cordoba House, it’s two blocks, around a corner, to get to the WTC site. Park Place doesn’t lie between the construction site and any mass transit stations, so you would need to go out of your way to have it offend you.

This is where I have to ask the most basic question: How far away would be far enough? 10 blocks? 20 blocks? Outside of Manhattan? Outside of NYC? When we draw these arbitrary lines based on cultural sensitivities, things get a little murky. At some point the WTC is going to be so tall that you will probably be able to point out several NYC mosques from its heights. Will they all be subject to public complaints or do they get a pass because they are pre-existing structures?

The real head-scratcher of this debate is that the building itself is not actually a mosque. Sledge describes its function:

In addition, the building planned for 45 Park Place is a cultural center with a prayer room — not a single-purpose house of worship for Muslims, which is probably what we should reserve the word “mosque” for. As Haberman also explains, “That it may even be called a mosque is debatable. It is designed as a multi-use complex with a space set aside for prayer — no minarets, no muezzin calls to prayer blaring onto Park Place.”

As a YMCA member I pass a small dedicated prayer room every morning on my way to my locker. Afterall, the YMCA is a Christian organization, even though it is open to the public and I’m quite sure it hosts members of many faiths. Yet aside from a few bible quotes on the walls and the prayer room, you could hardly call the building a church. It’s much more of a community center with lots of room for exercise, a daycare and a some generic space for other actitivites. In fact, it is this model that the NYC building is based on. Having been a YMCA member for several years now and having met a lot of nice people from many races and backgrounds there, I think we should be welcoming, not condemning this construction. I’m also comforted by what I have read about the people who will be running the center. From Pamela K. Taylor at The Washington Post:

All of my concerns, however, were washed away when I found out recently just who is proposing the mosque — an organization led by fellow On Faith panelist Imam Feisal Rauf. Imam Rauf has a long track-record of interfaith cooperation and dialogue. His understanding of Islam is liberal, tolerant, pro-woman. I have no doubts that the center, as run by Imam Feisal, will not only serve the needs of the local Muslim community, but also be a forum for bringing people together, fostering healing between communities, and building bridges where the crimes of others have driven wedges between us.

Myths on Suburbia

As a proponent of suburban living I still come into contact frequently with a mindset among city dwellers that the suburbs lack charm, social interaction and culture. Joel Kotkin does a pretty good job at dispelling those myths in a piece he recently wrote for Smithsonian Online.

On social interaction:

But suburban residents express a stronger sense of identity and civic involvement than city dwellers. A recent study by Jan Brueckner, a University of California at Irvine economist, found that density does not, as is often assumed, increase social contact between neighbors or raise overall social involvement; compared with residents of high-density urban cores, people in low-density suburbs were 7 percent more likely to talk to their neighbors and 24 percent more likely to belong to a local club.

On culture:

Suburbs epitomize much of what constitutes the American dream for many people. Minorities, once largely associated with cities, tend to live in the suburbs; in 2008 they were a majority of residents in Texas, New Mexico, California and Hawaii. Nationwide, about 25 percent of suburbanites are minorities; by 2050 immigrants, their children and native-born minorities will become an even more dominant force in shaping suburbia.

Kotkin also writes a lot about changing trends in housing and the importance of suburban locales. I though this comment was insightful:

A new landscape may emerge, one that resembles the network of smaller towns characteristic of 19th-century America. The nation’s landmass is large enough—about 3 percent is currently urbanized—to accommodate this growth, while still husbanding critical farmland and open space.

I’ve noticed this trend a bit in recent years since my wife and I got married and we bought a house on the edge of our city.  The peripheral areas in our county still identify strongly with Louisville as our hometown and there’s a serious allegiance there, but I also see community-based identities forming that focus on a smaller area and promote a small town image. Some of this originates in an artificial way with planned communities and heavily regulated neighborhoods popping up here and there, but the attitude that grows out of these seems to be organic. The only complaint I have is that I wish there were more opportunities for interaction between these small communities and their rural neighbors.

Kotkin also points out that a few things are going to have to change, namely the over-consumption of fuel by suburban commuters. He optimistically points out that this should be mitigated at least in part by the shift to working from home that solid internet connections is bringing about. Since I hope to be on that train at some point, I of course also love to hear it’s a growing trend.

Changing Louisville’s Skyline

I am a HUGE proponent of the 8664 project here in Louisville. For outsiders, the quick description is that it is a proposed idea to route much of our interstate traffic around the city, relieving congestion in out downtown area where three interstates currently merge together. The plan has the added benefit of removing a section of the elevated I-64 which currently serves as a major eyesore and obstacle to Louisvillians connecting with the Ohio River.

This video put together by the folks at 8664 describes much of the problem and highlights several reasons to support the plan. It’s part of a larger nationwide movement to fix some of the bad urban planning that occurred in the middle of this century. Check it out and think about what similar types of actions could be taken in your own towns and cities.