Still Stimulating?

Two reasonable standards, it seems to me, for anything in the current economic recovery bill moving through Congress is that items should be either job creating or sustaining or should be reformist in nature, in other words improving on some status quo.   Many items can be both, but President Obama is basically channeling Keynes when he points out that the idea here is getting money out to support the economy during tough times.

That’s where school construction comes in.    It’s stimulative* and it’s better than just digging ditches and filling them up again because it’s work that is needed.   So it was surprising to see school construction on the block in the Senate compromise, as several accounts indicate it is, and a bad sign of how political this whole thing has become.  In the short term, school construction is actually one of the more stimulative (job creating) things you can do with education dollars.   The idea that improving schools is essential to the economy is really a long term proposition.   Ideally school construction should be approached with a longer view in terms of education infrastructure needs and the needs of a diverse range of public schools**, but, regardless, it’s a peculiar target if you accept the jobs and/or reform criteria. 

*One caveat here is that some states are obviously trimming budgets in anticipation of this legislation and that’s going to mute the stimulative effect to some extent.   That’s a problem and so although some discretion, especially for states, will be needed to avoid just spreading the money too thin to make a difference, policymakers will have to pay attention to this dynamic.

**Also, although I would like to see a more robust federal role in school construction through infrastructure banks or similar ideas, you’d think that the construction spending in the bill would hold some appeal for those concerned about the deficit because it’s not long-term and will consequently not be built into the budget baseline as some of the other increases will.

2 Replies to “Still Stimulating?”

  1. You’re assuming that the conversations late last week were rational as opposed to posturing. When Senator Nelson (Neb.) can simultaneously claim that he’s cutting excess and being the BFF of schools, there’s something interesting going on…

  2. Your first caveat is important.

    The Senate bill still allows States to reduce their maintenance of effort to FY 06 levels, and allows the States to waive MOE and supplement, not-supplant provisions of Title I and IDEA entirely.

    The net effect of that will be no net increase in spending on education. States will cut their spending levels, use the Federal funds to make up the difference, and sing praises to heaven about the fact that they did not ‘cut’ any jobs.

    But for the billions being spent here, nothing new will come of it.

    Let’s hope Duncan has the intestinal fortitude to spend the $7.5 billion incentive grant wisely, and will be able to withstand future congressional riders to prevent him from saying no to bad decisions by the states.

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