Stimulus Bucks for New Projects

In the article "Companies Pretty Up Prices to Win Stimulus Projects", author Micheal Cooper touches on the subject of construction companies' strategy of slashing their prices on the upcoming first round of stimulus projects that are being funded by the federal stimulus plan. Most businesses are doing the same thing, trying to drum up business in tough economic times. The construction business has been hit particularly hard, with the collapse of the U.S. housing market. These companies are desperate to win the bids on these projects, and are bidding lower than most expect in order to accomplish these goals. In some states bids are coming in 15% to 25% lower than expected by state officials. This is a good thing for taxpayers, seeing as how they are funding these projects. The lower the bids, the more work can be done and the higher the value for the taxpayer's dollar. This also means that if the bids keep coming in lower, the stimulus money can go much further than initially expected. This means that more roads can be built, more bridges repaired, more tasks can be completed with the same amount of money. The basic rules of supply and demand dictate the lower prices. Many construction workers are out of work, so the work comes cheaper when it is available. This also brings up concerns that these low bids may not be totally accurate and may not reflect the true cost of the project. Contractors can sometimes underbid their competition, then try to squeeze out a profit by changing things that drive up the price and delay the project. This is nothing new, it's been going on in the industry for years.

This stimulus project is very important to the turn around of the slumping economy. Much like FDR's New Deal, this will put people back to work. Working people can buy goods and services, and feel more comfortable making major purchases. Such purchases can be cars or houses, both which are suffering in such harsh economic times. In order for things to turn around, this stimulus plan must work much like it did during the Great Depression years. Much of the current infrastructure in the U.S. was built during these years, along with the founding of many institutions that we take for granted today. Social Security and FDIC are two of the major programs started during the New Deal era.

Personally, I feel that the administration is doing a good job trying to stimulate the economy. The worst thing that they could have done is nothing. I feel that the worst may be behind us. It may be premature to say that, but I feel optimistic for the first time in a long time. With stocks seeming to stabilize and the possibility of the government relieving financial institutions of their toxic assets, we may actually be able to turn things around.