Advice for President Obama on Expanding Infrastructure Funds

Max's advice for February 21, 2009

Dear President Obama,

Max grew up as the son of a man who knew 'ALL' the answers to the problems of the world. Max's father said so! Many times, his father let everyone know that anyone who didn't know that he had the answers was a turkey or a knucklehead.

The famous Ma Bell, the second most powerful force in the world (next to God of course), thought so much of Max's father's opinions, that she made him 'Supervisor of Troubles'. This is true!

The advice Max promised you, President Obama.

Have your team examine ways to expand infrastructure resources.

Max appreciates the efforts that you have put into getting the stimulus funds through the Congress. Like many Americans, Max is bewildered at the political wrangling that went on within and between parties. One would think that these 600 plus rich men and women have no idea what is happening the country or in the places they represent.

President Obama, now that you have some control over some limited infrastructure funding, this would be a good time to use some partnering. Instead of having every project fully funded by the federal government, it would be nice to see if ways could be created to expand the amount of resources available.

An African presidential candidate that Max met recently showed how, when everyone worked together, they found additional resources beyond what the government in his impoverished country could provide.

It is just as true that if federally funded projects could get states and cities to put up additional funds, perhaps through bonds, more people could get back to work quicker.

This would reduce unemployment insurance costs and increase state and city tax revenues.

Economists have often known that real economies grow when they have a high multiplier effect. In essence the money paid the truck driver pays the rent; the rent paid to the landlord pays his/her groceries; the money paid the grocer pays the supplier. Somewhere the money leaves the town and multiplies through the warehouse, gas stations and farms.

If instead of paying 100% from the federal funds, states and cities could perhaps sell matching bonds locally, they could encourage local savings while putting money that was being stashed as cash to work for the community.

I think that if some of the infrastructure funds could be set aside for partnership spending, this would enable the most assertive and forward thinking communities to speed the recovery in their local market.

Giving those who want to help themselves an extra incentive could be a multiplier in its own way.

If your team doesn't care for this particular idea you can welcome them to come up with their own suggestions as to how to leverage the money to generate a higher and deeper impact on the economy. Finding a way to multiply the multiplier could go a long way in bringing the nation back to full employment.

Max wishes you well in all your efforts on behalf of the nation.

Max writes about greenways, rare diseases, timely topics, places to eat, travel and other issues of interest. He encourages you to add your comments.

Link one: simplified version of multiplier concept.

Link two: an article by Alan S. Binder on Keynesian Economics.

Link three: a math model for the multiplier theory with formulas.