It’s good that this is happening, but sad to see it happening so late in the game considering when the American Recovery and Reinvestment Act was passed:
President Obama on Friday will announce 66 new broadband grants and loans totaling $795 million, part of the administration’s continued rollout of Recovery Act grants meant to expand high-speed Internet connections across the country.
The awards range from a $5.2 million network infrastructure grant in McCarthy, Alaska to $17.5 million to anchor community institutions in Washington D.C. that will serve residents with high-speed Internet access.
So far, the administration has doled out $2.7 billion in grants, which is less than half of the $7.2 billion set aside in the stimulus plan for broadband Internet projects. The new funding, to be announced state-by-state Friday morning, will come from the Department of Commerce. That agency’s National Telecommunications and Information Administration and the Department of Agriculture have been responsible for the dispersement of stimulus funds.
I think this episode highlights some of the tensions and problems that have plagued our efforts at doing discretionary fiscal stimulus on an adequate scale. In the popular imagining, the big problem with government is that it’s wasteful and inefficient. So if you want to build political support for an agenda of activist government, in practice it’s crucially to be extremely careful with how you dole out the money. But care is the enemy of speed. For purposes of countering a deep collapse in aggregate demand, the important thing is to clear the relatively low bar of “this is more useful than having people sit around earning no money doing no work.” And you want to do it quickly and forcefully enough that private businesses will be confident that people will generally have jobs and money and thus that there will be customers for private firms.
All that, however, is the enemy of trying to assuage people’s doubts about government activism.
But again, crucial attention should be paid to the role of the Federal Reserve system here. Additional stimulus wouldn’t work if it was counteracted by less expansionary monetary policy. Right now the Fed seems satisfied with the current state of the labor market and the current state of market expectations. Given that, it’s not clear that whoever on the Open Market Committee is pleased with the status quo would allow more forceful fiscal policy to work. Or at a minimum, if there’s a FOMC majority that wouldn’t attempt to counteract more aggressive fiscal policy, that same block of FOMC members ought to be pushing for more aggressive monetary policy. It’s a scandal that amidst an economic crisis of this enormity the Obama administration has allowed vacancies on the Fed Board to persist for so long. On July 15, his much-delayed nominees will finally get a committee vote.