America Wasted Its Chance to Push the Economy Forward

Interest rates were low for years. Imagine how much the country could have gotten done.

Black-and-white photo of a construction worker on an empty highway
Jonathan Alcorn / Bloomberg / Getty

We blew it.

That is the queasy feeling I have as I watch borrowing costs surge, housing starts fall, and politicians rush to subsidize fossil-fuel consumption. Americans had a decade-plus in which interest rates were low and millions of workers were unemployed or underemployed. We could have made investments that would have benefited all of us. And we wasted that chance.

This period of unusually low interest rates, which lasted from the 2008 global financial crisis until now, was horrible in many ways. Too many people were unemployed for too long, and too many found themselves trapped in dead-end, no-security jobs while the cost of living climbed to astronomical levels. But it was an opportunity too. Borrowing was cheap, and the government  could have built and built and built without crowding out private investment or overheating the economy.

Instead, we slogged through the recovery from the Great Recession, needing more fiscal stimulus that never arrived. We wasted $2 trillion on tax cuts for rich people. We made some infrastructure improvements, but mostly delayed and dithered. While we did so, a catastrophic housing shortage developed, driving up the price of everything else. Our cities crumbled and roads buckled. The climate crisis intensified as we remained in fealty to fossil fuels that are bleeding families dry and destroying the planet.

Now we are left trying to fix these problems with higher labor costs, higher borrowing costs, higher real-estate costs, and higher material costs, at a time when every additional dollar of government spending risks stoking inflation and Uncle Sam is competing with the private sector for every hire.

Americans missed the opportunity to make progress in at least three major areas. First, infrastructure. We could have fixed what we have and built what we needed when interest rates were at scratch and the jobless rate for construction workers was 10 or 15 or even 20 percent, as left-of-center politicians suggested over and over and over again. Congress finally passed a compromise bill last year, but the cost of construction has swelled nearly 30 percent since 2019,  and the legislation hardly meets the enormous scale of the challenge.

Take the number of bridges—just bridges—that need repair. Roughly 46,000 of them out of the 617,000 across the country are structurally deficient. And we face similar problems with our electric grid, airports, water and wastewater systems, roads, highways, and mass-transit systems. Amtrak’s Northeast Corridor is falling apart, as is the New York City subway, and fixing them will cost millions more than it would have a decade ago.

We also failed to fill the infrastructure gaps we have known about for decades. We still do not have high-quality train service between Las Vegas and Los Angeles, Los Angeles and San Francisco, Dallas and Houston. We do not have simple connections between many of our major downtowns and their servicing airports (pray for anyone trying to get to New York’s JFK, ever). Our public schools desperately need new HVAC systems, windows, roofs, and plumbing upgrades, as they have for years.

Nor did Americans seize our zero-interest-rate moment to build infrastructure for the future. Our tech sector might be the envy of the world. But Americans still pay more for slower internet service than citizens do in many other nations; more than 150 million people in this country surf the web at speeds that do not meet the Federal Communications Commission’s broadband standard.

Second, energy. We could have used our free-money moment to transition the economy to renewables. On the demand side, we could have made every home, commercial building, and government office more efficient using insulation and other cheap-and-easy fixes. We could have electrified everything, using subsidies and regulations to replace gas stoves with induction stoves, gas-powered vehicles with electric cars, and furnaces with heat pumps. On the supply side, we could have offered solar panels to every homeowner who wanted them. We could have constructed nuclear-power plants, hydropower plants, solar farms, and wind farms, flooding the market with cheap, abundant, and clean fuel.

Instead, we made marginal improvements to the supply of clean energy, weaning ourselves off  fossil fuels a bit. But the United States still derives nearly as much power from coal as it does from renewable sources. We produce more crude oil than we did a decade ago, thanks to fracking and the shale boom. Gasoline consumption remains near its record high. Our slow energy transition has left us vulnerable to gyrations in the oil markets and made our climate crisis that much worse.

Third, housing. We did not build enough of it when capital was cheap, mortgage rates were low, and blue-collar workers needed jobs, leaving us with a shortage conservatively estimated at 3.8 million units. Instead, we turned our most vibrant cities into gated communities controlled by what amount to mercenary homeowner associations, letting disproportionately wealthy and white groups of neighbors hold up, shrink, or kill housing projects and drive up costs for everyone. New York City added 908,000 jobs but just 206,000 housing units from 2009 to 2019. As a result, the cost of a home in Brooklyn or Manhattan doubled. During the same period, San Francisco added more than 200,000 jobs but just 31,000 housing units. As a result, rents doubled.

The problem might be most acute in the superstar cities on the coasts. But it is nationwide: Despite the unemployment rate dropping below 4 percent and wages surging, nearly half of renters pay more than 30 percent of their income for housing, according to the Joint Center for Housing Studies at Harvard University. Moreover, tens of thousands of people have fallen into homelessness in the past few years.

Each of these issues urgently needs attention. And we could have imagined and constructed a better future for ourselves in so many more ways: new research institutes for vaccines and green energy; more community colleges, trade schools, and medical schools; a comprehensive, publicly financed day-care and early-childhood-education program. Yet we have a political system choked with veto points, whether the supermajority requirement in the Senate or community-input requirements at local zoning boards. We have a political system incapable of making long-term investments—indeed, of building anything big at all. We missed a rare window of opportunity. We still need to act, but we will have to do so when our problems are more entrenched and costs are higher.