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Academics propose a new, New Deal for infrastructure work

Date Posted: November 14 2008

When it comes to making a quick and beneficial fix for the nation's ailing economy, an investment in improving the nation's roads, bridges and other infrastructure is just the ticket.

That's according to an Oct. 24 letter signed by a group of 11 professors and sent to Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson. The letter suggested investments in infrastructure could be channeled "through state and local governments as a fiscal stimulus package for the American economy."

The group of professors, many of them from engineering and business departments, hailed from schools that included Standford, the University of Illinois-Urbana-Champaign, Columbia and Virginia Tech.

"You have a legitimate concern about the potential lag time between investment in infrastructure and the resulting effects on job creation and economic activity," the professors wrote to Bernanke and Paulson. "But unlike during the Great Depression, there are already many permitted, approved infrastructure projects across our nation
that could be funded to immediately jumpstart the economy."

The group attached a letter to illustrate their point, showing more than 90 transportation projects in eight states worth $4 billion that are "now ready to go."

"Extrapolating these findings across all 50 states, we project that there are $15-$20 billion worth of transportation projects that could be put out to bid in the next 30 days, leading to contractors on site in the next 60-90 days - and generating a considerable flow of money back into the economy."

They added: "This amount could be increased dramatically by adding ports,
airports, hospitals, roads, rails, sewers, and water systems. Let's get back to building a 'real' economy!"

Earlier, Bernanke said he was concerned that infrastructure investment would take too long to make a fast enough change in the economy.

The academics acknowledged that the oncoming winter season, contractor lead time and worker shortages in some areas could be among the "challenges" to their idea. Still, they suggested a Phase I with an "immediate capital injection" of up to $50 billion. Following this investment, a bipartisan panel of engineers and planners should "triage" the nation, "to identify projects that could potentially add value to the American economy."

Then a third phase would include a capital injection of between $100 billion and $500 billion in the spring and summer of 2009 for projects identified during the triage.