Direct public spending is more effective than other forms of fiscal relief because every nickel gets spent and jobs are created directly. What is today’s equivalent of the World War II buildup, minus the war?
First, we need huge investment in hospitals and medical supplies. We need to reclaim supply chains for products like N-95 masks and ventilators that have been moved abroad. Government has the authority in an emergency to produce these needed materials itself if contractors can’t be found. In World War II, the Reconstruction Finance Corporation underwrote more than $20 billion in war production plants. Some of these were called GOCOs, for government-owned, contractor-operated. Upgrading our capacity to deal with the public health crisis could be phase one of the plan.
Second, according to the American Society of Civil Engineers, the United States will need $4.5 trillion for deferred maintenance of basic public infrastructure by 2025 — roads, bridges, water and sewer systems, power grids, rail lines, tunnels and public buildings. Take the train from New York to Washington and you will see a living museum of 19th century infrastructure.