So, Why Didn’t the 2009 Recovery Act Improve the Nation’s Highways and Bridges?
Although the American Recovery and Reinvestment Act of 2009 (the Recovery Act) provided nearly $28 billion to state governments for improving U.S. highways, the highway system saw no significant improvement. For example, relative to the years before the act, the number of structurally deficient or functionally obsolete bridges was nearly unchanged, the number of workers on highway and bridge construction did not significantly increase, and the annual value of construction put in place for public highways barely budged. The author shows that as states spent Recovery Act highway grants, many simultaneously slashed their own contributions to highway infrastructure, freeing up state dollars for other uses. Next, using a cross-sectional analysis of state highway spending, the author shows that a state’s receipt of Recovery Act highway dollars had no statistically significant causal impact on that state’s total highway spending. Thus, the amount of actual highway infrastructure investment following the act’s passage was likely very similar to that under a no-stimulus counterfactual.