The latest White House infrastructure spending binge guarantees only two results.
President Obama calls his latest attempt to revive the economy a "Plan to Renew and Expand America's Roads, Railways and Runways." I'm calling it "The Mother of all Big Dig Boondoggles." Like the infamous "Big Dig" highway spending project in Boston, this latest White House infrastructure spending binge guarantees only two results: Taxpayers lose; unions win.
The plan would add at least $50 billion more to the nearly $230 billion already allocated in the original trillion-dollar stimulus law for infrastructure. Less than one-third of that infrastructure stimulus money has been spent, but the urgency to pile on has increased exponentially as the midterm elections approach and unemployment hovers near 10 percent. So, the president says he wants to "put people back to work" through a new "upfront investment" in surface transportation, airports and the air-traffic control system paid for by repealing tax incentives for the oil and gas industries — followed by massive, unpaid-for expenditures on pie-in-the-sky high-speed rail, "environmental sustainability" and "livability," whatever that means.
Obama spoke emotionally at an AFL-CIO rally on Labor Day about unemployed construction workers. A "lot of those folks, they had lost their jobs in manufacturing and went into construction; now they've lost their jobs again," he said. "It doesn't do anybody any good when so many hardworking Americans have been idled for months, even years, at a time when there is so much of America that needs rebuilding."
But here's the rub: Not all workers are equal in Obama's eyes. And most of them will remain "idled" by the Democrats' own design. The key is E.O. 13502, a union-friendly executive order signed by Obama in his first weeks in office, which essentially forces contractors who bid on large-scale public construction projects worth $25 million or more to submit to union representation for its employees.
The blunt instrument used to give unions a leg up is the "project labor agreement (PLA)," which in theory sets reasonable pre-work terms and conditions — but in practice, requires contractors to hand over exclusive bargaining control; to pay inflated, above-market wages and benefits; and to fork over dues money and pension funding to corrupt, cash-starved labor organizations.
These anti-competitive agreements undermine a fair bidding process on projects that locked-out, nonunion laborers are funding with their own tax dollars. And these PLAs benefit the privileged few at the expense of the vast majority: In the construction industry, 85 percent of the workforce is nonunion by choice.
We don't need to theorize about how this shakedown works in the real world. Boston's notorious Big Dig was a union-only construction project thanks to a Massachusetts government-mandated PLA. The original $2.8 billion price tag for the project skyrocketed to $22 billion in state and federal taxpayer subsidies thanks in no small part to ballooning labor costs. In February, the Bay State's Beacon Hill Institute found that PLAs added 12 percent to 18 percent to school construction costs in Massachusetts and Connecticut. In Washington, D.C., the Department of Veterans Affairs commissioned an independent study showing that PLAs would increase hospital construction costs by as much as 9 percent in some markets.
In short, Obama's new Union Infrastructure Rescue Plan is a political favoritism scheme that raises the cost of doing business and bars tens of thousands of skilled, nonunion laborers who choose to run open shops from securing work. In the name of patching up America's highways and byways, Mr. Fix It would create another gaping fiscal sinkhole to appease his special interest donors. Recovery Summer turns to Union Payback Fall.