Frequent readers will know that I do not buy into the Keynesian multiplier effect for government spending. But there is an even better reason why the stimulus bill will never work: it is simply impossible to break ground on any new government construction project in less than a year.
A year from now, any truly new incremental project in the stimulus bill will still be sitting on some planners desk with unfinished environmental impact assessments, the subject of arguments between multiple government agencies, tied up in court with environmental or NIMBY challenges, snarled in zoning fights, subject to conflicts between state, county, and city governments, or all of the above. Most of the money will have been spent by planners, bureaucrats, and lawyers, with little to show for in actual facilities....
To illustrate, let me tell a story. We operate a marina and campground on a lake in Ventura County, California. The marina office and store used to be a small floating building attached to the dock and floating on the lake (this is a fairly typical arrangement in small marinas). The County decided it, for whatever reason, did not like having a floating store building any more, and it wanted the floating building closed and a new modular building put in a corner of the parking lot, on dry land.
So we get a modular building and park it in the parking lot near the dock entrance, as ordered. Having been required by the county to take these steps, we were subsequently shocked to find that a variety of County offices refused to permit the new structure. Eventually, it took nearly 4 months and $10,000 in fees to obtain the 8 County permits and approvals we needed to park a trailer in the parking lot. And this does not include the cost of a fairly senior manager spending half his time chasing down all these approvals. At one point, the County demanded a soil sample, and so we had to have a company come out and saw into the concrete parking lot to obtain a sample of the soil underneath. God knows how long it would take to approve new construction on virgin land with water, sewer, etc.
Finally, some of you might be thinking that these government hurdles would be easier for the government itself to clear. Wrong. You have never, ever seen a government employee display as much energy as they will muster when they think another government agency is bypassing his or her authority. I made a presentation a while back to a group of county commissioners in California, and it seems like most of their jobs involve dueling with various state agencies and local governments.
The reason that you don't read or hear much about this perspective has to do with the fact that most of these amazing bureaucratic restrictions did not exist during the days of the New Deal, the time period in which the economic and social thinking of stimulus architect Paul Krugman is hoplessly mired.
Here's the perfect example: in my native Virginia, the 1930s saw the CCC do the massive project of building the Blue Ridge Parkway across the peaks of the Appalachians. Can you imagine how long the EPA would have held up this project today? Not to mention the fact that the Feds blithely applied eminent domain to force out thousands of mountain families who had owned this land for decades if not centuries. How many of them today would have (and should have!) attorneys?
The only way that such stimulus spending can actually have the immediate impact that Obama, Krugman, and Reich are all promising is if they ignore or eliminate all those safeguards both environmental and civil, that liberals and progressives have demanded over the past several decades.