Aileen Cho / ENR

The latest 2009 forecasts of construction industry activity and the U.S. economy in general are not good. The economy probably holds some of the greatest risks since the Great Depression 70 years ago. A comparison with that depression may be a stretch, but one lesson learned from that era is to not pull a Hoover maneuver and do nothing until national unemployment reaches 24%. As economist John Maynard Keynes taught, and President Franklin D. Roosevelt acted, a recession is precisely the right time to invest in the economy with fiscal actions that promote full employment, price stability and economic growth. The most effective stimulus is money spent on infrastructure and other capital investments that have long-term multiplier effects on the economy.

So far, the government has been stumbling along with little to show for its stimulus investments. The $152-billion package for consumers passed earlier this year and the $1-trillion-plus bailout for financial institutions have so far been relatively ineffective. It is hard to say where the $600 checks to individual taxpayers went, and the Federal Reserve refuses to say to which financial institutions it loaned almost $2 trillion, despite congressional and public cries for transparency. Lawsuits have been filed to pry loose this information. In any event, banks are not required to lend the money, which would help ease the credit crunch. Instead, many financial institutions are hoarding the cheap cash or using it to buy other banks.

The federal bailout of insurer AIG is equally dismal. It initially had few strings attached, and the total needed to keep the irresponsible firm afloat has ballooned from $85 billion in September to now more than $150 billion. There is no such thing as being too big to fail. You can’t put on a blindfold and just throw money at a problem.

Not all government spending is bad. The public and the nation deserve to get something for their money beside toxic financial assets that companies need to unload. President-elect Obama and many in Congress are leaning toward a new stimulus program based on public works. Some argue that it would take too long to ramp up major projects, but many already are designed and ready to launch—they are just waiting for funding. Administrative processes could be streamlined under executive orders and people could go to work in short order producing valuable economic assets.