What does the economic development future hold under President Barack Obama? It's a question that has been on a lot of people's minds since the election and inauguration.
Indeed, plenty of uncertainties remain about the administration's direction, its ability to pay for its priorities in the midst of economic turmoil, and its ability to push significant policy changes through Congress. But observers are hopeful that the administration has the aptitude to wrestle the downturn into submission and make positive things happen. "I think the Obama administration is off to a very strong start," says Charles E.M. Kolb, president of the non-partisan Committee for Economic Development. "He has made some outstanding choices in senior leadership in the cabinet, and the economic team is superb."
Kolb notes that Obama inherited the worst economy the United States has seen in seven decades. "He's got three challenges," he says. "One is to deal with the credit problem and the difficulty of how to dispose of the bad paper clogging the system; that has to be fixed. Second is aggregate demand; we're in a period when various bubbles have burst, and we're trying to ward off a deflationary spiral. Third is how to restore confidence in the financial-services sector, the productive sector and also with consumers in general."
With that in mind, the first burst of attention has gone to the economic stimulus plan that quickly moved from legislation into reality. Kolb has mixed views about the stimulus. "I think it'll have some stimulative effect, but I think it needs to be carefully monitored," he says. "We are throwing an awful lot of money around."
Though the $789 billion stimulus bill is just one part of the impact that Obama hopes to have on the nation's economic future, it's a good place to start examining how the business world will fare with regard to Washington policymaking. For one thing, stimulus promises to be a primary focus of the federal government for the time being, given the depth and intransigence of the economic crisis. Plus, the administration has made no secret that it intends to use its recovery plans as the first steps toward some of its new policy directions.
Roads and Bridges to the Future
With the help of the stimulus, billions of dollars worth of infrastructure will move to the front burner, and that - the administration hopes - will pave the way for more economic development and prosperity. Some of that money will pay for roads, bridges and other projects that could have an effect on the marketability and attractiveness of specific development sites.
"Only a relatively small amount will be spent on real infrastructure," says J.W. "Jim" Wheeler, a senior vice president at Thomas P. Miller and Associates, an Indiana-based consulting firm with focuses that include economic development. Still, this pie is so big that even a relatively small slice adds up to big money. And that, Wheeler says, spells opportunity for communities with infrastructure needs, as well as the businesses that will be hired to meet those needs. "Those companies and states associated with potentially reaping some of that kind of money clearly will be having a lot of activity," he says.
The recovery package sets aside more than $27 billion to pay for highways and bridges, but roads are just the beginning of the transportation investment. More than $9 billion targets rail projects, and $8 billion will help finance high-speed passenger rail projects. More than $8 billion goes to public transportation, $1.3 billion to air transportation and a little bit more to local transportation projects.
Beyond transportation, the Army Corps of Engineers gets nearly $5 billion for dams and other flood control projects, various maintenance initiatives, and cleanup of atomic energy facilities. Some $3 billion is assigned to facility projects on public lands and parks. The recovery plan also supports millions of dollars of grants and more than a billion dollars in guaranteed loans to help rural communities develop such essential facilities as hospitals. More money goes for veterans' hospitals and projects to upgrade community health centers. Also, about $4.5 billion is targeted at broadband development in rural areas, which in turn could make those locations more attractive for development projects that require strong communication links.
Help and Health
The economic recovery package also targets the millions of unemployed Americans, and has benefits that will help companies that hire them. Tens of billions of dollars are working to extend jobless benefits and help people afford COBRA healthcare coverage. Employers seeking to hire well-trained workers will benefit from the $4 billion that will support job training programs, as well as the dollars for training healthcare workers. Support for higher education increases, along with Pell grants.
"In the labor area, there's going to be a lot more spent on dislocated workers," says Wheeler. "There will be a lot of opportunities to tap into new money. That could be very helpful to companies that are restructuring and looking at sites."
The healthcare provisions in the stimulus package offer a look at some of the new administration's ideas for policy change. In particular, the health information infrastructure receives a $17.2 billion shot in the arm, which provides jobs and opportunities now but also paves the way for more efficient delivery of healthcare down the road. Wheeler says that companies involved in healthcare information technology can expect opportunity to grow through the recovery package.