The Obama administration-in-waiting has devised a plan, still in its infancy in details but well developed in magnitude, to create millions of jobs through public infrastructure projects. Various Democratic leaders talk about a plan ranging from hundreds of billions of dollars to over a trillion.
Creating jobs through public works projects sounds good. We fill paychecks, while creating infrastructure. The problem is, public infrastructure projects have a long history of underestimating costs. Understatement of costs is endemic to public works projects. Almost every major infrastructure project has cost a multiple of its initial estimate, including the Denver Airport, the English Channel tunnel, and the Los Angeles-Long Beach light rail, to name just a few. Once these large public projects are started, there is no alternative but to finish them regardless of cost. Half-built roads and bridges, particularly where they replaced existing infrastructure, are publicly unacceptable.
The biggest boondoggle of all time was the Boston Central Artery/Tunnel Project, the so-called Big Dig. On the cost side, the Big Dig was a massive drain on public resources. While estimated to cost $6.5 billion, the final cost came in around $14.6 billion. By the time interest payments are completed, the total cost will be $22 billion. Some of the costs estimates were known to be inaccurately low soon after they were made.
On the construction side, the Big Dig was an equal disaster. From thousands of leaks to falling tunnel ceilings, construction was one problem after another. The project was a disaster for the contractors involved as well, resulting in a major bankruptcy. Public lobbying efforts by contractors corrupted the political landscape. Ultimately, the public paid the price by funding tens of billions in construction above and beyond what was contemplated, plus higher road tolls and delays in other infrastructure projects for lack of funding.
Equally important for the present Obama plan, when the project ended, the jobs disappeared. No lasting job creation was effected for the $14.6 billion in expenditures. Large infrastructure projects are good at creating jobs in the short run, but add nothing in the long run.
Of all the concepts to help build the economy, Barack Obama has seized on the one type of project -- public infrastructure -- that has the worst history of cost overruns, corruption, construction incompetence, and economic harm. There is nothing to suggest that the legacy of the Obama infrastructure plan, estimated to cost hundreds of billions of dollars, will be any different.