Infrastructure. Infrastructure. Infrastructure. Economists and policymakers from both sides of the political spectrum keep saying we need to spend more on it.
Market Roundup
And let’s face it: With interest rates so low on U.S. Treasuries and municipal bonds, we wouldn’t need to break the bank to fund major investments in roads, bridges, airports, mass transit, state universities, water-treatment plants, power-grid upgrades, or any number of other things.
But as a recent Wall Street Journal story points out, infrastructure spending is on ice! Consider the following stats:
Cities and states sold only $140 billion in new project bonds in 2015. That’s the lowest level in the past two decades.
If you inflation-adjust the figures, they look even more striking. Infrastructure-related financing is down 53% in real terms from a decade ago and 21% from two decades ago.
The Commerce Department now estimates that non-federal governments are investing the least on infrastructure projects since the early 1980s, at least as a percentage of the overall economy.
The average muni bond yield just sank to 1.6%, the lowest in 20 years. So why aren’t governments borrowing like mad? According to the Journal, voters won’t back many new projects by agreeing to pay more in taxes. Pensions are in such dire shape that policymakers have to shore those up rather than spend money on infrastructure. And overall tax revenue isn’t rising at a fast enough clip to justify heady new spending.
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| Non-federal governments are investing the least on infrastructure projects since the early 1980s. |
It’s tough to say what will change this state of affairs. Maybe a true surge in economic growth that boosts tax revenue, or an increase in consumer confidence that encourages voters to sign on to capital projects?
But it’s worth pointing out that corporations aren’t investing much on plant, property, or equipment, either, judging from the latest government figures. So it looks like we’ll be stuck with substandard airports, roads full of potholes, second-rate transportation networks, and rundown schools for the foreseeable future. It also means “infrastructure plays” in the stock market – including construction companies, materials suppliers, engineering firms, and the like — may not be the best bets for your money.
In any event, what’s your take? Would you be willing to pay more in taxes in exchange for better infrastructure? Or do you think the money would be poorly spent? Will governments beef up their borrowing soon? Or will they continue to tighten their purse strings despite record-low borrowing rates? Let me hear about it in the comment section.
Until next time,
Mike
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The global markets – and investors like you – have had a few days now to digest Friday’s jobs figures. So what was really behind the strength, will it persist, and what does it mean for stocks going forward?
Reader Frebon said: “The jobs number was great, if you believe anything this administration says. Remember they falsified the unemployment number just before Obama’s election. There is still no demand in our economy and until the common sense-lacking Fed realizes that it needs to put money into the hands of the middle class who will spend it, not corporations and banks, we will have the same stagnant economy as Japan has had over the last decade.”
Reader Fabian also sounded a skeptical note, saying: “Unemployment is always a lagging indicator, in retrospect. That’s the problem. But effectively, it doesn’t really add up with other economic data, as mentioned. Anyway, this credit expansion will reach its end sooner than later.”
But Reader Tommr struck an optimistic note: “It’s beginning to look like the U.S. GDP is picking up quite a bit and the labor market is strengthening, too. I have been seeing ‘Help Wanted’ signs all over the place. It’s almost like everyone who is willing to work is already working and that just leaves those who don’t want to work anyway!
“The stock markets are set up for a strong advance from a technical and charted standpoint. The major indexes are trading way above their 200- and 50-day moving averages after treading water for an extended period of time (414 days). I am very confident in the future rise in stock prices.”
Reader Solly R. also suggested more upside is coming: “As I stated in a discourse a few months ago, the stock market is not logical. It must be realized that the market is driven primarily by its participants. While most Americans, economists, fund managers, etc., are holding cash, this is the only game in town (in the world). So foreign money and shrewd investors and those desperate for yield are investing and making money. The short positions are getting called and stock buybacks slowly continue.”
On the other hand, Reader Chuck B. said: “No market goes up indefinitely without corrections. Usually, there will be something like a 50% correction, even in a rising market.
“We have gone about seven years since the last correction of note. This rising market is getting a bit long in the tooth, and it’s overdue for at least a sharp pause or consolidation. With central banks violating all rules of logic in the management of money, this coming correction could turn into a collapse like 1929 – at least.”
I appreciate everyone weighing in. I remain somewhat skeptical about the economic and market outlook at this point in the credit/growth cycle. My read is that valuations of many assets, including stocks, are dangerously elevated relative to the underlying fundamentals.
What’s more, tightening lending standards and anemic GDP growth typically don’t go hand-in-hand with healthy, powerful bull markets. But as always, I’ll continue to analyze data coming in the door and let you know if and when my views change.
Have any other thoughts to share? Then be sure to do so in the comment section below.
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If you’re a bond market wonk like I am, you’ll find this Bloomberg story pretty fascinating. It talks about how U.S. Treasury yields are still higher than yields on government bonds in many other parts of the world. But the cost of hedging out dollar exposure for foreign bond buyers has gone up, too. The net effect? U.S. Treasuries no longer offer any “real” pick up in yield, something that dampens demand for our bonds among traditional foreign buyers overseas.
Computer systems at Delta Air Lines (DAL) failed in the early morning hours today, stranding thousands of passengers and resulting in canceled flights all over the world. The outages come on the heels of similar problems at Southwest Airlines (LUV) a few weeks ago.
Donald Trump tried to get his campaign back on track over the weekend and today by refocusing on the economy. His approach is to take a harder line on trade negotiations with foreign partners and to use tax policy to boost growth here at home.
The Rio Olympics are offering up plenty of drama and excitement for fans of international sports. But Comcast Corp.’s (CMCSA) NBC network failed to score gold on its broadcast of the opening ceremonies. Nielsen estimated viewership at around 26.5 million for Friday’s event, a 35% plunge from the 2012 Olympics in London and the lowest since the 2004 ceremony in Athens. NBC forked over $1.2 billion to air the Rio games as part of an Olympics deal stretching through 2032.
So what do you think about bonds here? Are Treasury prices going to head back up, or is the dip over the past few weeks the start of a much deeper selloff? Will Delta’s latest struggles deter you from flying? Have you been watching the Olympics, and what do you think of NBC’s coverage? Share your comments in the feedback section below.
Until next time,
Mike Larson
Mike Larson graduated from Boston University with a B.S. degree in Journalism and a B.A. degree in English in 1998, and went to work for Bankrate.com. There, he learned the mortgage and interest rates markets inside and out. Mike then joined Weiss Research in 2001. He is the editor of Safe Money Report. He is often quoted by the Washington Post, Reuters, Dow Jones Newswires, Orlando Sentinel, Palm Beach Post and Sun-Sentinel, and he has appeared on CNN, Bloomberg Television and CNBC.
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Spending continues to increase in cities and states, it just all goes to pensions and healthcare. And no, I don’t want my taxes raised to pay for more bureaucracy, pensions and healthcare costs.
Please do not use help wanted signs as an indicator of the labor market. Those who do not want to work are making too much money sitting at home collecting food stamps and government assistance. I know folks who have permanent, benefits paid positions that can’t get people to apply. They do not want to work 40-50 hours/week. They will make too much money to qualify for the government checks. This will only change when we make it uncomfortable to stay on the government dole. Not holding my breath.
This is a real problem. We need to spend on infrastructure but the states can’t afford it because tax payers won’t pay for it? My flip answer would be have the Federal government print more money and give grants to the states or issue 30-50 year treasury bonds to finance the improvements. Some projects lend themselves to private sponsorship and or public/private partnerships where entities issue long term debt , make the improvements, and get repaid from tolls for usage of the infrastructure like bridges and roads or fees from rail, sewer, water airport etc. utilization.
Mike,
Maybe you haven’t noticed it, but many many work-a-day Jane’s and Joe’s and the retired haven’t had a raise (above inflation) in quite a LONG time! Considering that background, plus the de-industrialization of America going back to at least the Regan administration, is it any wonder nobody is backing “raising taxes” for infrastructure projects?
Even here in my normally high-taxed and progressive state of WI we used to have a state fuel tax that increased automatically every year with inflation (I’m not sure exactly what went into that ‘inflation’ measure ), but it amounted to no more than a few pennies every year. Well, our elected representatives killed that off, now there is inadequate funding for roads, and no one has proposed a tax hike! Gee, we just can’t have things both ways, having nice infrastructure, and NOT be willing to pay for it. Whom to blame? I’ll refrain comment here, but I have my thoughts.
Taken as a whole, the government is already spending much more than it receives. The growing debt has to be paid by future citizens. Borrowing, even at 0%, also has to be paid by future citizens. There may be sophisticated economic theories that justify low-cost borrowing, but the average voter senses that the enormous debt is a world-wrecking bomb that needs to be defused.
Personally, I won’t vote for a dollar to save “starving orphans” – politicians need to prioritise our society’s needs and make tough decisions on where to spend the trillions they already have. We’ve been suckered into funding “vital” initiatives before, only to find that money is fungible. That new debt or tax only freed up money for some other stupid vote-buying program.
After all, if the initiative is truly vital it would be funded somehow – even if we DON’T give them more money.
Our company is closing after 25 years in the urban planning and environmental business. Unfortunately immense amounts of public money is wasted on the rigorous environmental permitting process needed to start new infrastructure projects, even for existing structures. There has to be rational compromise in terms of saving the environment versus allowing infrastructure projects to move forward economically. It took a couple of years for us and our associates to justify the building of a small pier for emergency boats because of issues such as the potential effect of the shadow of the boat on the small patch of coral present and the effects of construction noise on the scant marine life, even though this was in a working harbor with ocean liners docking nearby!
Excellent EXAMPLE. Thanks Lucy.
You are discussing the symptom and not the problem(s). Government employee union activities have driven compensation and retirement costs through the roof by organizing against the tax paying citizens. The investment returns on retirement system endowments do not meet projections, so governments are funneling any additional tax revenues into covering pension funding shortfalls leaving infrastructure needs unmet because the tax payers are rejecting bond issues. Any bond revenues generated for infrastructure simply release more current tax revenues to be squandered on current compensation and retirement benefits for unionized government employees who are holding the tax payers hostage. Enough, it must soon be over at the local, state and national levels.
You are describing the pernicious effects and affects of “entrenched bureaucracy.” This is another “vested interest” that goes largely unrecognized — except to the extent that “we” (tax-payers) are routinely chastised for “under-appreciating” OUR Public Servants! Really? Perhaps, were there 75% FEWER, I wouldn’t so much resent their gravy-train existent on my dime because I might then be able to RECOGNIZE their individual contributions to the common weal!
Common sense tells us that we cannot borrow money to give to people who do not like us.
Additionally, even with borrowed funds to rebuild our infrastructure at a low rate still creates debt. The object is to arrive at ZERO debt and move this economy forward.
The American people have not created the financial impending collapse of this Country ,
but the planned destruction by the One World idiots, radicals and Communists that are
momentarily in charge. How’s that worked for us???
I believe quite a few people would be willing to pay little more in taxes if it would fix the infrastucture…Problem i see is that past experience shows us that when addtional tax money i put forward for such purposes as those listed in your email that regretfully very little of that money makes it past the pockets and special interest of our politicians at all levels–state, Federal and etc. Too many greedy hands just waiting for the free money at the expense of the American citizen. what has happened to all the previous tax adjustments made for these purposes but never seem to get there.
No moderation. Just told it like it is
Despite the US economy’s need for infrastructure spending, Governments, federal, state, and local (not to mention your average family), are already struggling with excess debt. Even interest free, just paying back the capital will put further pressure on already thin (if not negative) future cash flows.
In 2009, President Obama approved the expenditure of almost $1 Trillion for “shovel-ready” infrastructure projects. It was later reported that approximately (only) 3% of that huge sum was funneled to such projects. Most of the rest of the loot was distributed to unions, unemployment funds, government agencies, political friends and other black holes that resulted in little to show….except increased bureaucracy, corruption and more DEBT. And THAT is why the citizenry are leery of new bonds costing $ Billions….and more of the so-called “shovel-ready” infrastructure.
Beyond THAT farce, what’s been done to formulate a list of (needed/necessary) “shovel-ready” infrastructure projects SINCE? . . .
Our capital is being consumed by debt-fueled consumption. It’s no more than that.
The federal spending on infrastructure is actually not that far out of line with postwar averages. It’s the capital spending at the state and local level that’s depressed. Could it have something to do with all those unaffordable pension promises that local and state governments made in the last couple generations?
The money that should be going to improve our infrastructure is going to support the illegal immigrants.
You are right to focus in on the country’s outstanding infrastructure needs. but you are barking up the wrong tree if you think issuing more debt based bonds to finance those needs is the answer.
Wouldn’t it be refreshing if we elected a government that would take the printing plates away from the corrupt greedy bankers holding a monopoly on our currency creation created as debt out of thin air and tried Social Credit instead? How would that work you ask?
Very simple premise; anything that is physically possible and desirable can should be made financially possible. Do we not have the needed raw materials and people needing jobs able and willing to work? Why then on behalf of the people it is supposedly elected to serve could the government not DIRECTLY create the currency needed to pay the workers to utilize the available raw materials to build any infrastructure society’s needs at the lowest possible cost by bypassing the middleman (bankers) who effectively do nothing more than print numbers on pretty pieces of paper DOUBLING the ultimate cost through interest on 30 to 50 year bonds. WHY DO WE EVEN NEED THEM? Do the natural resources of a country not belong to the citizens of the country rather than the bankers? Since they contribute no labor or raw materials to what society needs, why should they get a free ride for doing what government could do for the people by breaking the bankers monopoly on money creation?
Eliminating the interest would cut the cost in half and things could be kept in balance by simply taxing back the cost over the expected lifespan of what was created, or is that too simple and logical to ever be implemented?
Myron — you are DEFINITELY “speaking truth to power”, here — and also COMMON SENSE! Alas, “power” disregards “truth” — and by my reckoning, “common sense” became a vixctim of “Public (mis-)Education” commencing with Bill Clinton’s first administration (another epic national failure to place at Hillary’s feet — if you can find them, beneath the water she walks upon.)
In the news last year, Kentucky had to make a choice. Pie in the sky govt employee pensions….or infrastructure. Our stratosphere pensions were in such bad shape, bonds were a possible solution. The drawback, if you sell bonds to borrow money for pensions, you short your infrastructure. We’ve been having our cake and eating it too for some time now. In Ky, a school teacher can retire at 49 years old, go home and watch opra, play golf or fish for another avg 30 years on the tax payer dime. And Ky is not alone. Every states pension woes are in the news. When you consider the concept of retirement for the masses is less than 100 years old, you realize it is a Ponzi scheme, dreamed up by a politician to get re elected, knowing he would be in the grave before the bill came due. Ky pensions are out of control, all the way from Governors office down to county dog catcher. Do some various state research. File a FOI request for different govt level pension payout, and how many years service is required till “easy street.” IT WILL NOT WORK! MATH DOES NOT ADD UP!
Bond issuance may not be a completely accurate indicator of infrastructure spending especially in the water, wastewater and transportation areas. States operate significant low interest, low overhead loan programs that have multiplied federal seed capital many times over. My state started with $20M in 1985 and the fund is in excess of $3 billion now.
Meaning WHAT? “Seed” of $20M is now a “fund” of $3B — doing WHAT? Just “sitting” there, ripe for “diversion” by spend-happy state legislators seeking re-election? I suspect that you have A POINT to offer, but cannot discern it from you Comment. Please elaborate on how this once $20M-now-$3B “fund” is actually employed towards needed/necessary infrastructure projects within your community/county/state.
It seems like lots of the infrastructure workmis funded/spurred more by getting ‘free money’ via federal grants rather than local vision and planning. Grant writing is a growth industry.
Excellent point, barely ever recognized.
I find the Delta and Southwest Airline computer problems more than glitches. Redundant systems failed and it took hours for back up systems to patch in. This is a test we’ve failed. Just wait until we’re given the final exam.
I cannot even watch the Olympics because NBC and DirectTv could not reach a deal. How many people have DirectTv that are shut out of the Olympics on NBC and other shows they like on the CW. We have been out for about a month. I Wonder If That could also be a reason for the drop in viewers?
We find it difficult to understand all the angles on the labor market, investment by governments at all levels, and the claims and promises of the presidential candidates neither of whom inspire confidence across social, economic, ethnic, and racial strata.
How many potential contributors have been pushed to the sideline never to get back into the labor force? I talked with a lady recently who was pushed out during the recession, perhaps as just a way for her company to lower the average age of its wpork force and what that implies for their benefits and pension costs. This lady is now 50–Too young to retire, and too old to be hired over the past six or eight years.
Is she counted among the “unemployed?” I don’t think so. And how many more like her are wondering how they will make it financially?
Will people like her be pushed onto welfare? And having become both discouraged and turned into a dependent of the state–how do you think she will be compelled to vote out of self-preservation?
The “answers” to the (solid) REAL WORLD questions you pose may be available to you by expanding your “base” of input from MSM (MainStreamMedia, like “network” TV news channels) to “alternative” sources found on The Web/Internet. There are “many” such ALTERNATIVE sources, and I suggest you start with David Stockman’s ContraCorner.
Why should consumers buy what they don’t need. Why should corporations invest in production when there is no demand. Peoples savings are being ruined by low interest rates. We have a nation of gamblers.everyone wants to make a bundle on the stock market, but the stock market is not actually become more valuable. It is just that the money is losing value and corporations are buying their own stock with low interest money and everyone is on the band wagon. People have also lost money in the market swings and feel like they must become more frugal.
some of the best ideas could come thru this site and it would not matter. the debt , either statewide or federal, is to great and out of control. politician new back in the 50’s that giving state and federal pension would come back to haunt them. kicking the can down the road has ended and it’s time to pay the piper. why does the fed have to have 7 million workers.? now they will get pensions. and so on and so on. this system has ended in shambles yet no one will admit it.cut out the cancer and you start to solve the issues. getting rid of the government would be a good place to start.
I agree with you. I am unwilling to pay more tax in order to repair roads, etc, as long as my government (all levels, especialy federal) spends our tax money the way it does (millions to other countries, trillions in debt, supporting more and refugees and illegal immigrants, etc). Increased taxes is no guarantee of improved infrastructure. The politicians would only use more money as they please.
What happened to the President’s first election promise to help the recovery by investing in the infrastructure (FDR play book). Seems Wall Street bankers ended up with the trillions of dollars which contributed little to the economy. Not sure any President has as much power as is attributed to them.
The absurdity of the present state of economics is highlighted by the fact that I can get a
2% return on all the money I spend with my credit card while my money in the bank checking account earns 0.01%. At the same time, my credit cards would charge me 15 to 20% on any balance in my account if I failed to pay in full each month.
Would you agree that the system is seriously tilted toward spending rather than saving?
If that is true, why does our tax system allow billionaires to reduce the velocity of the money they control to ZERO? That really hurts the economy.
Is the brexit really going to happen. I read the new P.M. & Parliament are not/avoiding the vote.
Reply to Mike in infrastructure spending: Just because politicians of both parties think it’s a good idea to spend money on infrastructure doesn’t mean it really is a good idea. It just means we have a lot of spendthrifts in office who want to “take credit” for funding tangible projects that people (read voters) can wrap their heads around. And in case you wonder why our taxes are as high as they are – the phrased “increased government spending” should provide a satisfactory explanation.
Of course not that all gov’t spending on infrastructure is bad – and anyone in gov’t will tell you that when times are bad they get better prices on whatever projects they want to go ahead with. And that’s fine – but spending on what NEEDS to be done is one thing, and spending on what gov’t officials want to be done (usually things that pump money into their electoral districts – aka “pork”) may well be something else. And one think you can be sure elected officials from both parties agree on is that they all want to get re-elected, and juicing up the pork spending in their electoral districts is a tried and true way for incumbents to retain office. No wonder pork (oops – I mean infrastructure spending) has bi-partisan support.
Let’s take a look at a recently completed infrastructure project where I live in Connecticut – the so called “Fast Track” rapid bus way line. It was enthusiastically supported by governor from both parties – but does that make it a good idea – or just an idea that could sport the governors nameplate on it as a legacy builder. It’s also worth considering if the project was something needed, or just a throw away of public money to the powerful construction industry.
Fast Track in CT is a limited access roadway for busses only that runs along the right of way of the railroad for about 40 to 50 miles (including branches) between Waterbury and Hartford CT. It was an alternative plan to a “light passenger rail” system that was thought of first – but shelved due to advantages a bus-way would have over a track bound railway. And the idea was in part to reduce traffic in the state capital of Hartford. This is how public transportation works in greater NYC – but will it work in suburban CT? A good number of commuters clog the highways twice a day at rush hour going first in and they out of Hartford County. Perhaps it’s a good idea.
Well in the end Fast Track turned out to be a very costly project with a price tag of about $65 million per mile (not in total – but per mile). It further turned out that unless you live on, or can easily get to and park at a Fast Track terminal it doesn’t “go your way” anyway and so you don’t get to commute to Hartford without your car and end up braving the rush hour traffic anyway. And of course it was billed as a benefit for the poor – but the majority of the poor don’t live in the high priced suburbs along this route – they live in the larger metro areas – some of which are served by the line – but man of which are served by a street bus system already in place.
So it should come as no surprised now that it’s done and operating that citizens of our state want to know how the projections for its use are coming out. And while there is very little chance of it paying for the multi-billion dollars cost of its construction they have expressed interest in knowing if it’s at least breaking even in its operating costs or if it’ll wind up being another long term subsidy of a money losing public transportation system driving up our taxes – already among the highest in the nation.
Well it turns out the state has refused to report on the operating costs of the Fast Track. So as a tax payer you might want to know – but you won’t. It goes without saying that if there were good news there we’d read it on the front page of the Hartford Courant (our state newspaper), but you can’t – and you can’t find out any other way either. But since it’s clear that Fast Track busses and terminals are sparsely populated (I live near it in the Capitol district) the reason why the state hides the numbers if fairly clear. The happy looking financial projections used to sell it didn’t pan out, and it turned out to be a financial disaster.
Spending on things that need to be take care of is one thing – but politicians don’t necessarily support that kind of spending. That’s why we have essential roads and bridges in poor repair in America – but all kinds of other construction that we have no need for whatsoever (like the famous “bridge to nowhere” in Alaska). It’s not that nobody has spent any money in public works – it’s just that money isn’t necessarily being spent in the right way to take care of our problems. But no matter what it’s spent on – and no matter who benefits the most from infrastructure spending (usually the construction industry benefits the most) we the taxpayers will surely be left to foot the bill. Does that prospect really make you want to encourage willy-nilly spending on infrastructure just because it sounds like a “need”?
Let this serve as a “forewarning” to taxpayers in Milwaukee, WI, regarding its IDIOTIC PROJECT for an “electric” streetcar public transit system in the “Downtown” area.
With so many other social programs demanding funding, and which are popular with voters, politicians who face dwindling tax receipts are rather loath to spend money on infrastructure. If it ain’t broke, don’t fix it – at least until it does break. ‘Trouble is, after it breaks, it might cost a lot more to fix it. In business, Southwest and Delta are likely finding that to be true with their computerized reservation, ticketing and traffic control systems.
in my opinion, the current infastructure as bad as it is, is not viewed as a priority by most who went through the 07-08 crash and are still trying to recover from other things–cities are bascially broke when it comes to local projects and potholes, states seem to be distracted from highway improvement programs, and without someone at the top that enforces the major need to stay ahead of the curve, we will stay behind the curve for a while–not sure how many new jobs could be created by a national initiative to rebuild all the highways, airports, etc, but if it is a significant number of jobs, it may be worth looking into with the next president we get–maybe it could be integrated into the road to citizenship for those who are here illegally–take a highway job for 3 years and you get some kind of advance benefit to becoming legal–it looks like there is a % of the workforce that does not even want to work at all–that may be part of another problem stemming from the crash–demotivated workforce stuck in a lack of pay rut–lots is small issues that create a big pile of non productive energies
Of course taxpayers don’t want to pay more taxes. The REAL issue is WHERE our money is going now. Currently 60% of our discretionary tax dollar goes to the military. Because of the way the rich manipulate the media, the average person thinks this is reasonable. They don’t even know that we spend nearly as much as nearly the whole rest of the world COMBINED.
We also waste 1/3 of our health care dollar to insurance companies.
Cut the military in half and eliminate the money to insurance companies. That would give us a LOT to spend on infrastructure, including alternative energy. That is what presidential candidate Jill Stein proposes to do. Anyone who sees the need for infrastructure and alternative energy should be supporting Jill Stein and her Green New Deal.
Why give more money to the same people that have proven they can’t manage a lemonade stand. Anyone that manages depreciating infrastructure assets knows that they must allocate funds for maintenance. The govt failed, again. Anyone that would rob Social Security and sacrifice our military men and women for political purposes does not deserve out trust or money. Privatize it all, then citizens may have a chance of getting their money’s worth.
Muni bonds yielding 1.6 percent ? Unfunded pensions at city, local and state levels nationwide ? Stagnated wages for the better part of the past 8 to 10 years ? There’s no incentive in the private of public sector for even the most basic infrastructure investment. Perhaps with a new adminstration lowering taxes, deruglation, and a uptick in growth, some monies will hopefully, become available before there’s a catastrophic meltdown to the grid or multiple failures to our highway systems.
Cut the Federal Tax ,let the State and City taxes be raised somewhat to pay for infrastucture and evrybody should be happy to drive on safer roads.
Does this mean there is no Real Money in the federal government? Or is the present administration setting the government up to fail if their party doesn’t win? The second question is hard to understand if (by law) Congress send the budget to the White House for approval. So I’m back to the first question, has the federal government run out of ways to COOK THE BOOKS?
Hi Peter.
The Government is borrowing to pay for debts and projects because they can at the lower
interest rates.
This is an election year, so we see the result in improving Job Hiring, as Governors
spend to get themselves re-elected.. State, Federal and Local money is used on Infrastructure based on a sharing formula.. The Federal gov is supposed to put money into the State, to be divvied-up as the State sees fit…
Nowhere is it written that the Feds contribute Directly to State or City entities such as the Cops.. That is how States loose control over their own Police Agencies.
Look at the money being spent in NY to help the current government to hang on to their
seats. Even Buffalo is going nuts with their Canal Project because of electioneering..
This could have been done years ago.
Hillary’s NY hiring promises have to appear to be fulfilled or NY residents may not support her.
Cooking the Books is an issue, but right now, it is all Pulled Pork.
“willing to pay more…”? NO WAY! Cut the waste, featherbedding and entitlements and spend that money on infrastructure and security.
What goes around comes around. Sound familiar? Every governmental (and public sector ) entity in the world was taken hostage by the union movement of the late 19th and early 20th century. And rightly so, working conditions and wages were deplorable. But as unions gained power there seemed to be a greater propensity of principals of these unions to extract extreme retirement benefits for their members along with extreme wages, and extreme union member dues. It seems no one expected these union members to live so long. Oops! Now we have to pay the piper at inflated prices. OK says the government, we’ll just deflate the dollar and everything will be OK. Many of the union workers retire, (the boomer generation). Now the interest rates decrease and we can’t support the levels of support we promised to all these previously supported individuals. Oh, My!
Who do we blame? As in a very known prior Sunday cartoon venue that many of you will remember: “We have met the enemy; and the enemy is us”.
Hi Bruce,
It is not true that the enemy is US…
Government Unions were a creation back in the 80s to get a government reelected and
to assure a source of funding for politicians, through Union Dues..
Why would a Government Employee need a Union? Was it Slavery, long hours,
job harassment, Job security, Seniority? No… It was the Booming 80s and
Government Employees wanted to Share the Boom when they saw rising private sector wages.. So… the Enemy was Greed, Envy, and Equality.
Did the US have to follow what happened in Japan? Probably, because of Envy.
In order to support a Big Government, a thriving Private Sector must be able to FUND IT.
The Present Government is determined to weaken the Private Sector because they like to
fund the Victims of the Economy for the Votes they need in the next election.
In 1983 I took a $4 an hour pay cut to go to work for the County so I would have a pension when I retired. Local governments that offer pensions and other benefits provide sub-standard wages in most cases. Ask a teacher or a cop or a fire fighter. Pensions aren’t the problem: it’s failing to fund the pensions while you’re getting cheap labor. Those pensions aren’t being socked away, they are being spent daily by retired folks to live on, which is good for the economy. Don’t throw the baby out with the bath water.
Regarding “Why are governments not funding any infrastructure projects”?
I happen to live in California where combined taxes are already so high that I will never, ever vote in favor of any bond issue because I refuse to have my taxes raised even further into the unacceptable range. My view is pretty simplistic but reflects the reality of how things are. If the government wants to fund infrastructure projects, it should do so within existing budgets by reallocating from the overly generous government giveaways (like government pensions!) that we can no longer afford. I’m not holding my breath for that to happen here in the “Peoples Republic”, but I do hold out some hope, however small, on the national level.
No one knows if this super bubble will burst if the fed does not raise rates. in fact the fed
may have to lower rates again.
One way to boost infrastructure spending would be to restore highway funding to levels of 1950-1980s. Adjust gas tax rates upward to reflect inflation in the decades since current per/gallon fees were set. End diversion of gas tax money to create bike lanes. (Or charge licensing/user fees for bicyclists.) End gas tax subsidies for electric and hybrid vehicles by establishing a system of annual fees to exact like-kind infrastructure charges in lieu of the avoided fuel taxes. Not popular, but collapsing bridges and useless roads for all will not be well-received either. Increased construction activity would help generate economic activity to support increased spending in fields like schools.
If there isn’t an upgrade in the power grid and a CME or EMP happen there will be gnashing of teeth, but it will be tooooo late. Hiding head in sand will not prevent either happening.
Elect Hillary and after 40 years in public life it will all start to happen.
FUNNY!
when we were a manufacturing economy we needed roads, bridges and the like. Now that we are an environmentally conscious service economy comprised of doctors, nurses, restaurant and warehouse employees, all we need is a bus to get to work, or at least that is what the powers-that-be seem to think. Trucks and trains are the lifeblood of commerce, in fact the flow of truck traffic on Interstate 5 resembles the flow of blood cells through the veins and arteries. On second though, maybe our economy does need a doctor to restore the health of our worn out “blood vessels” as it were.
Hardly anyone wants to mention the $Trillions the USA has spent on unfunded wars based on fabricated evidence, or the approximately $6 Billion in cash that went missing in Afghanistan during Dubya’s tenure.
Our country still hasn’t paid off the debts incurred during our misadventures in SE Asia 50 years ago !
Who needs roads, airports, modern transportation systems when we can invade another sovereign nation for Halliburton, KBR, and Chevron…
We need to raise taxes and spend a lot more on infrastructure so the youg retired government worers can easily get to their second homes and vacations.
I think the help wanted ads are due to the fact that there is a major effort push to raise the price of what used to be properly priced. When maids make up to $200 for 4 hours and painters, plumbers, electricians make 3x what they did 2 years ago when deflation is at the highest in a long time we need to resist buying. It is not their cost but greed. How much does cleaning chemicals, meters, plastic pipes cost more than a few years ago,
answer about 25 % less. Thank Angies list and others for being bought out, as in maybe that is part of it or not.
Another problem in California for infrastructure financing is diversion of new tax money that should be going to roads and crumbling bridges (including high pensions). They voted more taxes and the money was then spent on building infrastructure for new insider developments and not fixing the roads as promised. They voted on a strictly limited cost high speed rail project only to see all the restrictions ignored, the substitution of a very slow train system, vast eminent domain seizures against private property owners, and the money spent elsewhere for insider benefit. This breeds mistrust and produces the reluctance to tax more for probably more false promises from the same old politicians with ever more greedy special interests.
Sorry Tommr you had best read the latest GDP figures they were less than half the estimated amount and the bar on that was set pretty low. I know your trying to flog this dead horse but for something that has been dead awhile do you not smell something.
Quote or an increase in consumer confidence that encourages voters to sign on to capital projects? unquote. I don’t think there is a shortage of consumer confidence or desire to borrow more money the bottleneck is the banks. They in their own funny way are taking a closer look at the consumers ability to repay and that is really in doubt today. My granddaughters story comes to mind. She is an apprentice electrician not earning top money yet. When she gets her ticket she must get own job through the union like most contract workers today. Good money but you must wait your turn on the job list. Her husband drives a parts truck for a car dealership. She is 28 years old. They wanted a house so they went hunting found one and went to the bank. The banker said no big deal we can float your $230,000 mortgage and your eligible for up to $300,000. Then my granddaughter says we could use a new car as well as we have 2 young children going to expensive day care and we need better transportation. No problem says the friendly bank manager here is a loan for that as well. For someone brought up in the 50’s and 60’s the danger signs were flashing all over the place for me especially in this dog eat dog world. If construction hits a speed bump they are gone.
Kudo’s to Chuck B he has it right. Anybody that cannot see this market for the pyramid scheme it is in trouble. Big banks will be bailed out again with your money and investors will be left holding the bag after the music stops. The longer it takes the bigger the fall. As I explained yesterday you are putting your hard earned money in the trusting? hands of large corporations of dubious character and I outlined the problems of Airbus, Amazon Japan, and a car company yesterday and this is only the tip of the iceberg the ones being caught with their hand in the cookie jar. All it takes is a whiff of a scandal today and they tank money is that fluid. Barclays just settled a Libor case for a 100 million and the banking list of crooks goes on and on. Do you own these ticking time bombs. Let me rephrase that you do not know if stocks you hold are entirely on the up and up not cutting corners to increase profits.
US people have been conditioned that taxes are too high. The only taxes that are too high are real estate taxes. Education is good but the school systems in the US are too expensive and miserable at the same time.
There is no need to have the funny tax system for investments. Income is income, no matter if short or long term, and should be taxed on a sliding scale.
For infrastructure the users should pay. Higher gasoline taxes for infrastructure, higher fees for water.
At the same time the counties and cities should stop with the social programs for their citizens. They employ by far too many people doing idiotic jobs. In our place it is so bad that you are not allowed to use a shovel any more without a building permit. I know a guy who works for “code enforcement”. He is a dummy who barely understands what he is talking about and half of the working day he sleeps in his fancy city owned truck. Also, police is not doing their job right. For a fender bender 3 or 4 cruisers show up, none of the drivers following basic rules like using directional signals. I saw them make turns where signs prohibit them. If they were on a chase and using the blue flash lights (or their whole stupid christmas tree) and the sirens, I would not mind.
While at it we should have a new 2nd amendment: One that does not allow private guns as toys. That would save the public a lot of grievance and money, too.
When a knife is falling do you try and catch it at minus 10%, minus 20%, or do you wait with the smart money for the masses to exit????
Lower investments in infrastructure over time….bad news for the american economy.Seems to me that USA is sitting on a multitude of bubbles that will cause much pain not only to investors but to the livehood of the middle-class americans. In my opinion what blures the big picture at this point in time is the huge capital inflows from the troubled economies abroad.For them the american economy is a relative “save heaven”.consequently, many are “parking” their wealth here.
The fact is that the republican party, both at the local and national levels’ has been unwilling to approve most iinfra stucture spending, so long as obama remains president.
Governors Kasich(ohio), scott(florida) and christie( new jersey), Republicans every one, even turned down proposed projects for which the federal government was prepared to provide 95% of the funding.
The fear among th Republican ledership has been from the beginning that obama might gain traction as a leader and constuctive force, and thereby give natioal liberalism (which they had thought safely dead) a second life.
Once the gop gains control of the presidency s well as both houses of Congress( Heaven forbid ), they will suddenly rediscover infrastructure as a worthwhile objective of national policy,
sorry Robbie additional expenditure by visitors to Ireland is spent on goods and services, those receiving the money spend part of it on more goods and services, then those receiving this money also spend part of it on goods and services, and so on through continuing rounds, at each round some of the money received is saved and some is spent on imports.
Let’s face it – many of those in our government, at all levels, are corrupt. This is true regardless of the political party they represent. They are thieves, swindlers, liars and worse. They don’t care about anyone but themselves. They have no interest in doing what is best for the people of our nation, only what is best for themselves and/or their personal causes. THAT is why we’re in our current situation. They have taken things that didn’t belong to them – namely our tax money – and used it for their purposes rather than what it was intended for – thus we have the numerous short falls in many accounts (pensions, healthcare, etc.) as has been mentioned by so many of you. Unfortunately, we don’t hold those in our government accountable for their many sins. Perhaps we don’t know how, or perhaps we don’t have the courage. Whatever the reasons, and until we change the status quo, things will only deteriorate further.
I agree totally with you, 110% I agree. This is why many people in the higher Echelon in government do not want Trump in. Because they know the American people are tired of their frivolousness and their corruption and Trump is going to clean house because the American people have demanded it. It is ridiculous when you go to the store and a dozen eggs cost you $3. Absolutely freaking ridiculous. And when California doesn’t have water because we are selling it to the Chinese. The government must think American people are stupid. We are not stupid we know what is going on but as you said we do not know how to stop it. And in fear that Obama will start martial law how can we have him arrested? He should be arrested and taken out of the White House for his many sins that he has committed against the American public. Because of him we could go into a depression worse than 1929. Do not kid yourselves people. Wall Street is for Wall Street.
The fact is, infrastructure spending is at an all-time high.
Governments all over the planet are doing it. That’s where all the money is going.
The infrastructure I’m talking about is the large number of tunnels being dug by the governments of every nation in the world to preserve the lives of the self-anointed elites from what’s coming.
So why is it that no government on the planet can make a sane decision?
Simple: They’re all scared of the future and digging-in. Don’t expect to see long-term civil engineering projects from people who say basically: “Spending money on our citizens makes no sense when the game is over.”
You don’t have to believe me. You just have to experience it.
Keep an eye on the sun.
You are absolutely correct!!! They will not fix a flood zone here in Findlay Ohio but they have been asking to fix for years. They will not fix it and they have asked the Corps of Engineers to come in and evaluate it and nothing has been done for the last 5 years. Because it is for the citizens. Meanwhile they cannot get flood insurance and every time they have a flood it wipes out the bridges it wipes out the town and the stores and their homes. This is been ongoing for years. From the Buckeye state. Retired usn. Colorado Oregon and Montana our state’s to watch.
We don’t need infrastructure spending, we have defense and security spending as our National Boondoggles. After all, we’re not the Greatest Generation we’re the Duck Tape and Plastic Generation. We’ve allowed the MIC and its minions to scare us into submission. Our own inane Foreign Policies assure perpetual war. Our media stokes the fires of fear and our leaders find new ways to bilk us into debt. Guns and butter (?) how about guns, butter and tax cuts. All it takes is going 600 billions per year into debt. No room for infrastructure spending, we’ve got wars in Syria, Iraq, Afghanistan, Yemen, Somalia, Pakistan………………………………………… to fund. Oh, even though the Soviet Union died 35 years ago we’ve got to have new aircraft carriers, stealth destroyers and submarines to protect us from Trump’s banker.
infrastructure spending and infrastructure bond offering will come to the picture when negative interest rate set in, so we can keep busy, just a decade from now!!!!
What we need is government spending on everything that is not necessary,especially on private expenses for all those who depend. on everything from cradle to grave…I ,can remember that during the GREAT DREPRESSION,(which did not think was very great), My
father said he was going to vote against ROOSEVELT, our neighbor said “don,t bite the hand that feeds you;,my father replied ,; If he would get off our backs ,we could feed ourselves.
I need someone to explain how spending billions on infrastructure is going to help the economy if gas taxes are not raised or toll roads are created. If this works why doesn’t the Government buy one or both of the major car companies and give away cars to anyone that is driving a gas guzzler over the age of say 10 years.
Infrastructure improvements great idea like how about upgrading the power grid or maybe a water pipeline to pump water to Northern California and lake Powell the entire country would benefit we could possibly stop or slow down flooding fill all the resivors .Hell we built the Alaskan pipeline the interstate highways and these would be great job opportunities I’m sure people across the nation wouldn’t pumping a little water across the US before its coming in their homes. Oh ya from a old guy like me since when can you remember the government doing any thing positive for the country?
There’s more graft in bombs than in bridges?
The foreigners who are buying U.S. bonds should not hedge them for currency fluctuations which reduces their net yields, because an appreciating dollar is a good bet which will increase their yields measured in their currencies.
Why is there never any thought given to actually paying off or down the municipal debts? In many places this is not even possible. Paying interest simply goes on forever taking up more and more of available tax money until the inevitable default.
If we had an administration that was business friendly and we cut corporate taxes and regulation things would get better the biggest road block for the American economy is the federal goverment
Did anyone stop to wonder why no one will vote for higher taxes to support infrastructure improvement, put more American workers back to work and stimulate the economy? Sounds like a win/win at these interest rates, doesn’t it? Well, there really is an easy answer to this. The middle class (who pays most taxes) is worried Worried? Yes, worried. Worried about the cost of health care, worried about their job (income) worried about college education costs for their kids, worried about retirement. You could substitute the word afraid for worried or how about scared out of their minds? Take a different perspective on Bernie and Trump. Where is their support coming from? Different demographics but same motivation. People are scared of the future. Fear shows itself as anger. Until we deal with the concentration of wealth/political power and balance the rules of our free enterprise system so that the majority of hard working Americans benefit from the economy. In fact things will get worse. This is not a conspiracy nor are the top 1% bad people, they just have been able to acquire wealth, buy political power, change the rules in their favor and continue. When you make the “Free Market Rules” you guarantee you win the game!
What did we get for the $10 trillion that Obama spent?
Environmental impact and other similar academic studies absorbed the bulk of the money.
NOSTALGIA
I remember well reading a U.S. News and World Report front page article on this very same subject ( Public Infrastructure) in 1986 ! Same exact issues, the neglected state of our nation’s roads, bridges, and streets. This issue is trotted-out just before every major election, then it disappears for four years again. Repetition. Then is now, wow- 30 years later we still have the same public issues to address and the same excuses: No money. The reason is simple, infrastructure was never the true priority of government, money or not.
We have a consumer economy. The Federal government borrows and spends to fund consuming and for short term durable goods like a new desktop computer, car, or college education. Retirement pensions and social security (Entitlements) is where the big U.S. government spending priorities have always been and still are. Nothing much will change, except we are nearing the end of the road ( when borrowing and more money is not an available option). Then we begin a real collapse. Until then, its one road or bridge at a time here and there, piecemeal.
Local infra-structure projects are suppressed not only by financial limitations due to pension expenses but by increasingly repressive environmental regulations.
TARP was almost a TRILLION $ that was supposed to go to these projects. Instead it simply lined the corrupt pockets of political parties.
The US does not have a fiscal problem at all – it has a corrupt political system problem.
Tax receipts are at an all time high and very little infrastructure improvements came out of TARP – most of it went ti line the pockets of political cronies – R and D alike.
Capitalism will never fail – Crony capitalism is what is failing – while the media simply calls it capitalism and the ignorant masses of today ( particularly the college “educated” ones being brainwashed through 16-20 years of school ) believe the media meme that it’s capitalism failing – all so they can promote the One World ORDER communist plans being implemented around the world.
Watch the youtube video “Yuri Bezmenov full interview” to understand how the Marxist plan to destabilize a country has been playing out in the US for a hundred years !!
It will BLOW YOUR MIND and should be shared w/ everyone you know.
My FIRST REASON is: perhaps taxpayers are fed-up with decades of “new projects” awarded to “lowest bidder” that go-to-crap in 5 years or less — but not after incurring massive “cost over-runs.” SECOND REASON: FIRST REASON generates election-fund “kickbacks” by vested interests. THIRD REASON: Politicians want to run re-election campaigns on “no new taxes” platforms, which will eventually cause those same politicians to call for “privatizing” such infrastructure builds/rebuilds; that is, “no new taxes” promises are kept, but citizens are now stuck paying “for-profit” user fees [one may care to peruse the work of Michael Hudson, author of “Killing the Host” — a far better speaker than writer, so seek him out on YouTube.] FOURTH REASON: ‘think those few citizens who remain tax-PAYERS are not already aware of “peak debt”? — of the nearly incomprehensibe extents of past borrowings compounded by multiples of “murky” UNFUNDED LIABILITIES at local, county, state and national levels?, that such represents an insurmountable debt burden obligation on future generations? (including their unborn grandchildren and great-grandchildren!) For “infrastructure” spending to have any chance with (remaining) tax-PAYER voters, all levels of “government” need to be radically reduced, “priorities” need to be OPENLY debated, and EVERY PROJECT subjected to rigorous “cost-benefit analysis.” In my city of some 50k population, I am daily witness to OUTRAGEOUS “infrastructure projects” that serve zero “need” other than some politician’s re-election agenda. It’s purely wasteful, thoroughly stupid, and absolutely NEEDS TO STOP!
Didn’t we give Obama $800 billion to spend on infrastructure a couple of years ago? Where did all that money go?