Thursday, August 05, 2010

To Culver & Branstad: The ' I ' is for 'Infrastructure'

August 5, 2010, 10:00 a.m.

"Jobs" Focus is Misleading Economics and Politics
(bought to you by*)

Iowa's two candidates for Governor -- a former governor vs. the incumbent -- are engaged in a food fight over "jobs": their own, and those of the thousands of unemployed Iowans.

The economic analysis and rhetoric of both of them is misleading at best. As politics, it has been self-defeating for Governor Chet Culver, and has led to a despicable TV commercial from former Governor Terry Branstad.


Human societies have come a long way since the day we came down out of the trees and started chasing, and later growing, our food.

Today we live above a veritable house of cards. Each of those cards is a part of our "infrastructure."

They include roads and bridges, oil and natural gas pipelines, railroads and airports, municipal water and sewerage treatment plants, dams and locks, telephone and Internet networks, and the power grid -- among other things. Some are built and operated by governments, some by public utilities, and some by traditional profit-maximizing corporations.

We don't think much about the air we breath until we can't see through it, our eyes water, we start coughing, or we learn it is contributing to our parents' cancer and our children's asthma.

Similarly, it is seldom that the mass media, elected officials (or you and I) spend much time thinking, talking or writing about our nation's infrastructure until one of those cards collapses.

Remember when the I-35W bridge over the Mississippi River in Minneapolis collapsed? That was one of those cards. It got our attention -- briefly. [Photo credit: Minnesota Department of Transportation]

Bridges last a long time. They don't last forever. They need to be regularly inspected, repaired and replaced. (Three years ago yesterday, TRIP, a national transportation research group, reported that "26 percent of bridges are 'structurally deficient or functionally obsolete.'” John W. Schoen, "U.S. Highways Badly in Need of Repair; Thousands of Bridges Need Rebuilding, But Funding Hasn't Kept Up,", MSNBC, August 3, 2007.)

By now, everyone knows about the damage done to the Gulf of Mexico by BP's oil spill. What we may be less aware of are our dependence upon, and the risks associated with, the underground network of natural gas and oil pipelines that criss-cross our nation and are subject to leaks and explosions.

Only last week this happened near Battle Creek, Michigan. Eric D. Lawrence and Brent Snavely, "Fumes from oil leak creep over Battle Creek," Detroit Free Press, July 27, 2010 ("An estimated 840,000 gallons of oil leaked into a creek Monday that feeds into the [Kalamazoo] river").

Pipelines, like bridges, need to be regularly inspected, repaired and replaced. They too corrode, weaken, and leak. Like BP, Enbridge Energy Partners, the owner and operator of the pipeline, had been warned of the risk of oil leakage. The investigation isn't yet concluded, but it now looks like those warnings -- like those given BP -- were ignored.

"The company that owns the pipeline that leaked thousands of gallons of oil into the Kalamazoo River near here was notified twice this year of potential problems involving old pipe prone to rupturing and an inadequate system for monitoring internal corrosion -- one of a pipeline's biggest threats." Eric D. Lawrence, Christina Hall and Chris Christoff, "Michigan oil spill: Could this have been prevented? Firm notified of potential problems along pipeline," Detroit Free Press, July 29, 2010.

And let's not so quickly forget the 90-year-old Lake Delhi dam that finally gave way last week -- and the others that may soon follow. As the Register later editorialized, "Thirty-one Iowa dams have structural problems or other deficiencies. Nearly all are earthen structures that support small lakes or ponds and, if improvements aren't made, these dams could fail, too, according to state records. The Iowa Department of Natural Resources has classified six of them as 'high hazard,' which means failure may result in loss of life." Editorial, "Public Dollars If There is a Public Benefit," Des Moines Register, August 9, 2010.

There is virtually no end of examples of the infrastructure that is so central to our day-to-day lives, but can cause so much disaster when it goes terribly, terribly wrong. It's the infrastructure that most politicians and corporate CEOs don't want to even think about, let alone build, repair and replace.

What Governor Culver set out to do last year with his horribly misnamed endeavor was to focus attention on Iowa's share of our nation's infrastructure needs, identify the most critical (62% of which are flood-recovery-and-prevention-related), borrow about $857 million (to be paid back with state revenues from the gambling industry), match it with federal and private sources of some $610 million, and start with the shovel-ready projects -- now scheduled for all, and underway in most, of Iowa's 99 counties.

From almost any conceivable vantage point, this was an effort (approved by the Iowa legislature) deserving of statewide applause and commendation.

What Branstad needs to answer is, "What would you do with those fire stations, water treatment plants, libraries, bridges and flood-protection projects that Culver has funded?"

What are the options? You continue to let them rot -- like the bridge in Minneapolis, or the oil pipeline in Michigan -- or you build new and fix what's there. To pay for the projects you either raise taxes or you borrow the money. Given that Iowa is well up in the top 10 states for high credit ratings, and low obligations-per-citizen, borrowing made sense.

Would Branstad ignore all the needs, or just some? If the latter, which projects would he not fund? Would he have preferred to raise taxes rather than issue bonds? Or if he would find the money by cutting public services even further than they've already been cut, what programs would he eliminate and how much would that generate?

What Culver has done is responsible governing; something we should all be thankful for in this age of two dysfunctional major political parties. It may not be as politically appealing as talk about same-sex marriage, abortion, immigration, taxes, and guns, but it's one hell of a lot more important to the present and future of Iowa than any of those evening news sound bites and commercials.


Rather than public projects, we're more used to taxpayers' money being funneled to for-profit corporations in the form of tax breaks, subsidies, bailouts, government contracts, and other nefarious schemes -- all too often in exchange for campaign contributions. It's called "socialism for the rich, and free private enterprise for the poor," or "my profits are mine, my losses are the taxpayers.'" (My reaction: If no one else is willing to put sufficient money into a new project -- not the entrepreneur, his or her family and friends, venture capitalists, banks, pension funds and insurance companies -- it doesn't look to me like a very good investment for the public's money either. What's wrong with "the marketplace" working its will?)

In order to sell such giveaways of public money to the wealthy, they are usually described as "jobs programs."

(As I have often written here, you can't jump-start an economy, 80% driven by consumer spending, by giving money to CEOs. No business person in their right mind is going to hire more employees, to manufacture more products, when they can't sell the inventory they already have to unemployed former consumers. If you really want to pull out of recession you do what FDR did (during his first month in office): You make the government the employer of last resort and put all the unemployed on the federal payroll. They spend their paychecks, demand for consumer goods increases, the private sector starts hiring to make more of those goods, the federal payroll declines, and the recession is over. We are paying an enormous price as a nation for letting our ideological purity regarding "socialism" and thinking that "government is the problem" stand in the way of such an obvious path to prosperity for all.)

Thus, it is understandable why Culver, out of political habit, would call his infrastructure proposal "I-Jobs" -- a jobs program (although even he might have thought to exercise restraint with regard to his early boast that it would create 30,000 jobs).

So now he's in a food fight with Branstad over the numbers -- which range, in various estimates, from 4,000 to his original 30,000. This is a fight Culver cannot possibly win, and which he could have, and should have, avoided.

Here's Branstad's latest commercial.

Forget about the precise numbers. To suggest that you can spend $875 million of public money, plus $600 million in the matching funds it makes possible, on projects in 99 Iowa counties, without creating jobs, in addition to being a dishonorable political assertion is economic lunacy. Of course it has created jobs!

In a nationwide -- indeed a global -- economic recession there will be unemployment. It is, for the most part, unemployment no governor can do anything about. This time around, even the federal government (refusing to create a real federal jobs program) has been unable to do much about it.

To put precise numbers on how many jobs I-Jobs created is mostly smoke and mirrors. You can't get accurate data, and even if you could it's not clear what should be included.

Do you just count the guy running the heavy equipment on the highway construction project? Or do you include the folks manufacturing, transporting, stocking, and selling retail the work clothes he or she buys, or those who work in the supermarket and cafes where the workers get food?

Culver would have been better off never to have even mentioned jobs -- except perhaps as a closing almost after thought: "Oh, yes, and we hope this will all provide a few jobs for those who might otherwise be unemployed."

For more on the issue, see, e.g.:

Iowa Department of Management, Report to the Governor on the I-Jobs Program's Implementation Status, July 26, 2010.

Thomas Beaumont, "Branstad ad exaggerates job losses, economists say," Des Moines Register, August 3, 2010;

Editorial, "Iowa should not regret investing in its future," Des Moines Register, July 31, 2010

"Top five I-JOBS recipients account for 62 percent of the $705 million," Quad-City Times, July 30, 2010 (Johnson $154,668,799; Linn $113,039,675; Polk $101,549,786; Story $40,355,070; Black Hawk $27,983,896);

Editorial, "Value of I-JOBS is flood repair," Quad-City Times, July 31, 2010 ("Follow the money and Gov. Chet Culver’s touted I-JOBS program clearly should be called I-Flood. The top five counties benefiting from I-JOBS are those hit hardest by the 2008 flooding that, frankly, made even our 1993 record-setter look like a big drip. Those five counties won 62 percent of the $705.3 million allocated and borrowed for immediate infrastructure repair and better flood plain management.");

Rob Daniel, "Officials: I-JOBS program has created jobs," Iowa City Press-Citizen, August 3, 2010 ("According to the latest program report, the program has translated into more than $154 million in funding in Johnson County, including $5.76 million to Iowa City to build a new fire station and wastewater treatment plant and $27.1 million to Coralville for flood control along First Avenue.").


* Why do I put this blog ID at the top of the entry, when you know full well what blog you're reading? Because there are a number of Internet sites that, for whatever reason, simply take the blog entries of others and reproduce them as their own without crediting the source. I don't mind the flattering attention, but would appreciate acknowledgment as the source -- even if I have to embed it myself.
-- Nicholas Johnson
# # #


Anonymous said...


I hope you address the new scheme on payments to the grandiose Iowa university presidents that was announced recently.

At a time of recession and unemployment, and a time of economic crisis, the BOR has somehow found a way for the over-paid university presidents to receive even more compensation.

From 2008 to 2010, a time of recession, the Vice President of Health at Iowa, Jean Robiliard, increased his salary like 15-20% to $520,000, while laying off scores of housekeepers and nurses.

Is that not malfeasance? Is that not morally decadent? At a public institution?

Please address the issues of public employees milking a system in crisis, for personal gain.

Nick said...

Notice Regarding Advertising: This blog runs an open comments section. All comments related to blog entries have (so far) remained posted, regardless of how critical. Although I would prefer that those posting comments identify themselves, anonymous comments are also accepted.

The only limitation is that advertising posing as comments will be removed. That is why one or more of the comments posted on this blog entry, containing links to businesses, have been deleted.
-- Nick