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Obama’s Economic Stimulus Plan….”Big Dig Deja Vu??”…

(bumped up by nasuS)

In the midst of the current economic turmoil, virtually every economist worth his salt can make valid cases for the necessity of both fiscal and monetary stimulus. I appreciate the use of PEBO’s use of the term “investment” rather than “spending” in proposing an economic stimulus program not seen in this country since the New Deal.

Read more here as to Obama’s Stimulus proposal, “Obama Outlines Stimulus Plan.”

I hope, though, that in proposing an “investment” program, that he is mindful of certain parameters that any qualified private or public investor would utilize prior to making his investment. What are those parameters?

1. With whom am I doing business?

2. As the investor (lender), what is the credit rating of the investment and of the borrower?

3. What is the “time to maturity” … that is when can I expect to generate a return on my investment dollars?

4. What checks and balances are in place to make sure that the borrower performs? Including making sure there are no conflicts of interest.

5. Will my investment perform through stress tests … both physical and financial?

6. Are there support mechanisms in place to mitigate risk or distribute the risk? 

7. Will the investment benefit from a “truly competitive bid process” in the marketplace?

Remember, that, as taxpayers these are our investment dollars that are being invested and like any relationship with a financial planner we need confidence that our “capital” is being managed judiciously. If not, we will most assuredly “underperform”.

If this stimulus plan is truly an investment, let me remind you of the type of investment that we do not need.

“The Big Dig” in Boston was Tip O’Neill’s farewell gift to his constituents in the city of Boston and the Commonwealth of Massachusetts.

That project is the single largest Federal “investment” ever undertaken. What was initially targeted as a $6bln “investment” over an 8yr time frame ended up being “$16bln” over budget and 7yrs overdue. The level of crime, graft, corruption, and fraud was rampant.

Read more here from the overview of this project.

Yes, some of the same individuals who were on the “investment committee” for “The Big Dig” are still on “our investment committee” today. Feeling a little queasy?? Yep, me too.

If you are nervous about the wise use of your capital for these investments then join the crowd. I am all for making wise investments with a fair return on capital for dollars invested but I am not one who likes to “waste” money on investments that don’t have strict budgets and guidelines managed by qualified individuals.

Those “investments” strike me as risky and imprudent ventures. If I want that kind of thrill, I can do it on my own.

***Join us to night to discuss this and much more on “No Quarter’s Dollars and Sense with LD at 8pm****               

  • Jon Sparks

    So we shouldn’t invest in infrastructure because of the Big Dig?

    Sorry, I have issues with that.

    The big dig was a horrible project. But that doesn’t mean we should shy away from making the investments we need because we might screw up again.

    What type of investments am I looking for?

    High speed railroads
    Bridges
    Green Energy – especially wind and solar

    So far, for me, Obama is striking the right cords in his call for massive infrastructure investments. It’s the only possible way we can get ourself out of this mess.

    This country has taken major steps back in the past 50 years in terms of our infrastructure, engineering, science and technology.

    It’s time to leap to the front of the world again.

    Heres to hoping Obama can help bring us there.

    Cause if not, God help us all.

  • Linda C.

    Taking infrastructure projects out of “ear mark” spending to create a commission to oversee and evaluate these projects would be a huge gain. That is about the one thing that I liked with the Obama plan. The rest were second rate Hillary Clinton retreads.

    We still have a long way to go with computerizing hospital records. Some of the software engineers really need to be strung up

  • Ferd Berfle

    So far, for me, Obama is striking the right cords in his call for massive infrastructure investments. It’s the only possible way we can get ourself out of this mess.

    This country has taken major steps back in the past 50 years in terms of our infrastructure, engineering, science and technology.

    Part of the problem lies with businesses that are more interested in short-term profit than delivering a good product ahead of schedule and under budget; another part is the incompetence on the part of gevernment in its legally-mandated oversight; a third problem is the often too-cozy relationship between the government and its contractors.

    We can perform infrastructure work until the contractors come home but we won’t get the sort of product we’re need until the three issues above are rectified.

    Good luck with that one as I don’t see this President-elect doing much about these problems.

  • Jon Sparks

    Well it certainly starts with refusing to give no-bid contracts to companies close to our leadership. Obama has said he will NOT award or allow congress to award such contracts. Will he follow through? Will congress listen? who knows. But I for one am happy to have a President who recognizes, at the very least, the inherent problems in such contracts.

    I actually believe this is somewhere where our struggling economy can actually help. there aren’t going to be many projects for contractors over the next few years – certainly the biggest will come from the Government. Thus, as long as the government insists on work being done at the highest quality and on budget, contractors will have no choice but to listen or to be out of work.

    I’m not so pessimistic and cynical as you appear to be. America’s the greatest country in the world. Why can’t we have the same sort of infrastructural investments that countries across this globe have been making for the past decade?

  • LD

    Jon,

    Not sure where or how you can read that I am not supportive of infrastructure investments. All I am highlighting is that any “investment” needs to stand up to a “rigorous” process, which is exactly what did not happen with the largest Federal investment in the history of our great land. Come on…remain focused!!

  • Susanjane

    I didnt hear anything in his remarks about railroads. IMO rebuiding the rail systems is essential. The Europeans are way ahead of us on that score. I don’t see how we can be really energy efficient until our trains make a comeback.

  • Ferd Berfle

    I’m not so pessimistic and cynical as you appear to be.

    That is the sort of off-hand remark I have come to expect. I don’t know what your background is but I have worked for a major government contractor for nearly 18 years on more than a dozen projects, many concurrently. I stand by my statement, irrespective of your protestations concerning my “cynical appearance”.

    No-bid contracts make up a very small percentage of government work, especially long-term contracts. And even if they were the biggest percentage, my three comments still hold.

    Your attitude typifies the sort of mindset that gets us into trouble constantly with the “we’re the greatest” cheerleading. We certainly were before we forgot what Eisenhower admonished us about before he left office.

    We’ve rested on that “greatest” laurel long enough–it is time to prove it again–by correcting at least those three things I mentioned in the post above. We didn’t win WWII by talk.

  • lark

    I don’t know a lot about a lot but I think that investors here are called investors because in some way they act as proxy for the payees. At time of maturity, I believe the payees will be many that have not yet been born.

    I understand that our habit is for seniors to ‘invest’ the livelihood of juniors and freshmen on the belief that juniors and freshman would be better off. And in some ways they have. But not in all ways.

    I am personally done with investing what an unborn generation will be hard press to pay for. We have no guarantee that these hard pressed future dwellers of our great infrastructure will be able to enjoy it with sufficient ability to enjoy life’s other pleasures simultaneously.

    At the moment I feel that I approve of investing that for which I am willing to pay for myself. I agree that is not much but I am certainly willing to consider investing my wealth if that investment would benefit future generations. I don’t want to consider investing the wealth of future generations for my present well being. I have to draw the line now because I don’t think the kind of proxy role we have taken over the past 40 years is going to continue to work.

  • Jon Sparks

    I agree.

    I know he isn’t too well liked here, but I’m all for ideas no matter where they come from.

    Have you read Senator Kerry’s (and Specters’ proposed bill for high speed rail lines?)

    Thats the kind of thinking we need. It’s a great bill that shouldn’t be overlooked just because the guy supported Obama.

    http://www.boston.com/news/politics/politicalintelligence/2008/11/kerry_pushes_hi.html

  • Ferd Berfle

    I agree. Railroads have been neglected for far too long. Trucks should be for short hauls from rail yards with railroads doing the long, heavy moves. It’s a shame so many tracks have been allowed to fall into disrepair. These will be expensive to rehabilitate but it is a very good idea.

  • http://www.deathofthedemocraticparty.com xax

    I still don’t see how this is actually targeted to a broader american population. Which is why I don’t like it. I can see no bid contracts in future with the project.

    The biggest chunk of jobs has to do with infrastructure and unlike the big dig, that requires some type of skilled labor. All the rest of his proposals will have no short term effect, and their long term affect may be minimal when you consider the size of this economy. For example energy effiency: change some lightbulbs, replace heating/water systems, plug some holes. That will cost you a couple thousand (or tens of thousands) in the short term but only yield a couple hundred in savings in the short term. Think about it you can spend $2000 on a water system, but only save $50-100/yr. How long will it take to make good on that investment? Not including any repair costs that might be required.

    If properly enacted, his plan can streamline us, but I hardly see how this is an economic stimulus. It sounds FDR like, but is NOTHING like his system. It looks more like a black hole, in which our money will disapper.

  • Ferd Berfle

    There is actually an even bigger project at Hanford (Richland, WA). If this one isn’t successful, the Columbia River and its entire watershed are in trouble.

  • Susanjane

    Thanks for that link. I will be contacting my own senator to ask him to support that bill. Will also contact Specter to give him some attaboys. I live in Fl now, but am from the northeast and fondly recall riding the trains regularly in my younger days.

  • Jon Sparks

    I posted a longer response to this but it seems to have disappeared. Not sure what happened.

    Basically, I’m a little confused as to your point. I know you’re not saying there should be no infrastructure investments but rather with ones like the Big Dig.

    My question is, are you saying we shouldn’t try ambitious projects like the Big Dig, or that we merely have to be more careful in completing them?

    If your saying the Big Dig itself is the problem I fundamentally disagree – i believe it is a great project that has united Boston (now that it’s completed). IMO, the problem was in choosing the contractors, completing it, etc.

    If that’s what you’re saying then I completely agree. However, I DON”T think we should shy away from ambitious project like the Big Dig just because it struggled. We just need to work harder to do a better job completing them.

  • Paris

    I believe Fred is saying, in part, there is much corruption and short sightedness inherent in government contracting, until it is corrected, we can expect failure and theft, albeit measured.

    And I agree.

    But Obama is familiar with the drill, government contracting is popular in IL.

    Can’t think of a better guy to handle it.

  • LD

    I have no problem with the project. I have HUGE problems with the process. We are in agreement!!

    Thanks for your engagement.

  • Jon Sparks

    Thanks for getting back to me.

    I guess then my problem is that you’re putting on Obama’s shoulders responsibility that its impossible for him to have. He can’t be directly overseeing these projects, choosing the contractors, etc.

    I just don’t see how that’s Obama’s responsibility. It’s going to take a group effort, for sure, but other than proposing large scale programs I don’t see how HE ensures that these projects don’t become the Big Dig.

  • LD

    I am saying that the governemtn should engage the private sector in a very rigorous process to make sure that there is total accountability.

    The Big Dig was rife with corruption because the governemtn did not implement a system that promoted accountability.

    Saying it is one thing, doing it is another.
    Crying about it after the fact is a wholly different topic.

    Competitive bidding, rigorous oversight, incentives for jobs completed beforehand and below cost…all the sorts of things that private enterprise deals with all the time.

  • democrat

    The only problem with Obama’s plan is that it should be even bigger — We are in trouble with crumbling infrastructure and need enhanced transmission lines, universal broadband (including in rural areas) and better mass transit.

    As far as I’m concerned, we could be hiring youth for conservation projects and hiring artists like FDR did with the CCC and the WPA. Put people back to work and invest in what we need for economic growth.

  • LD

    Instead of hiring youth, how about mandatory civil service??

  • Ferd Berfle

    While mandatory civil service might be a good idea, I see potential problems with the all-volunteer military should civil service be mandatory. Just a thought to consider.

  • LD

    Fred,

    I understand and appreciate that. I keep coming back to that concept merely to try to get people thinking about the need for youth to commit time and effort in serving.

  • Ferd Berfle

    What I am saying is that big government projects will not work until and unless:

    1. The cozy relationships between contractors and government overseers is ended, e.g., you can’t go to work for a contractor if you’re a government overseer and you can’t go to work for the government if you’re a contractor.
    2. Private enterprise is held to schedule and budget; and
    3. Until the government hires people who have experience in the work they are overseeing, to include scope of work that are all-inclusive, which would end the constant scope creep and fair and equitable adjustments.

    The Big Dig’s main problem was with the original scope, which was poorly written, ill-conceived, and poorly executed, and that is just the start.

  • LD

    Fred,

    I concur. Well said. I commend you!! Thanks.

  • rolling_thunder

    Umm Umm this is a juicy read. The checklist should be framed and sent to PEBO. This is no time for spending on bad investments. It’s a time for killing corruption and cutting the fat.

  • Ferd Berfle

    I certainly agree with your point about service to country. It is high time that it was encouraged, rewarded, and honored.

  • typical.white.person

    Fred Thompson on the economy:

    http://www.youtube.com/watch?v=7IrR3o7x1ps

    .

  • http://www.myspace.com/isomer_69 LAUREN

    All of these infrastructure jobs are jobs for men. Women aren’t going to go out and bulldoze and jackhammer the country! Where are the jobs for women? There are more women in this country than men and look at all of the households run by women only. This “infrastucture” BS won’t even make a dent in the economy. This isn’t the 1930′s where women sit at home and wait for their husband’s W.P.A. checks.

  • Lizzy

    Undoubtedly Women will return to their homes where they belong. Michelle will be a lovely example of wifely devotion. Don’t worry too much about those jobs for the men; unless the Big O is very nice to the Chinese he won’t have money for any infrastructure projects. W. spent all our capital.

  • Ferd Berfle

    Ever heard of Rosie the Riveter?

  • Paris

    Where I live, I see a lot of women in construction jobs, particularly road work, boy, I didn’t give it a second thought.

  • http://uppitywoman08.wordpress.com Uppity Woman

    Let’s hear it for No Bid contracts and Over-runs. Chaaaaaaaaaaa ching!

  • Larry

    I think that people that are laid off due to economic conditions… should be able to borrow from their 401K plans without penalty,including 401K loan defaults that arise from being laid off or downsized…THANKS

  • pete garza

    Hanford: remediation(cleanup) is a fraud. they have excavated conteminated sites then transported the conteminents to a huge hole in the central area of hanford and buried for future generations of contractors can continue to rape the taxpayer. I have worked there.pete

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    workplace safety…

    OHSAS 18001, element 4.6, Management review, requires organizations to review company’s occupational health and safety (OH&S) management system. These reviews should be conducted at planned intervals to ensure system’s continuing suitability, adequ…

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