Public Construction & The Election Cycle: Buying The Vote
For as long as we can remember, politicians like to get reelected. In fact, that appears to be their main job. However, most of what they do is out of the public eye, providing little visibility to their legislative accomplishments. This creates an issue for them. There is nothing tangible that their voters can see delivered for their time in office. In order to solve this dilemma, when the time comes for voters to pull the lever, they need to create visible indications of their actions on behalf of their constituents. In fact, they want them so visible, it makes clear they worked hard for the home crowd. Voila, political largess showers down upon the streets, highways, and bridges just in time for the election or what in the past fell under the nomenclature of old fashioned pork.
For those that wonder what this cycle looks like, the following graphic makes clear the Political Construction Cycle:
And, while the public cannot control the exact timing of spending, as that is executed by the government, it can indicate its support for Infrastructure Spending. During the 2016 Elections, voters approved a record amount of Public Infrastructure Spending, approving 477 of 575 ballot measures, representing an 83% pass rate. As these funds typically are insulated from the ability to be siphoned off to other purposes, unlike typical tax revenue, these types of ballot measures have become increasingly popular as they ensure the spending focuses on what the public wants done.
However, while the public may approve, the government controls the time when these funds are spent. Recent data indicate that the timing of this spending coincides with the Political Construction Cycle, which remains alive and well and living in a town near the average voter. Public construction fell 1.3% in 2017, in its typical post-election year drop. However, unlike most Year 2’s of Presidential Cycles, transportation construction actually rose 8%, front loaded in the first 3 quarters of 2018, so projects were completed in time for election day. Then after a late year pause, construction spending appears to have picked up again at a rapid pace. Total Transportation Construction Spending rose 12% in January and February while Highway Construction, the most visible symbol for the voter, rose 14%. Underpinning this strong rise, Transportation Contract Awards rose 22% combined in 2017 and 2018. These awards typically lead Construction Spending by 12 – 24 months, meaning roads and other projects will be completed and/or highly visible just in time for Election Day in 2020. What a coincidence!
In addition to the above, while the members of Congress may not agree on much, they can agree on one thing. When it comes time to pull the lever, there is nothing like an Election Night Victory Party to celebrate another term in office. It appears, despite their disagreement on everything else, Republicans and Democrats like good old fashioned spending for the home town crowd. According to recent reports in the media, they have begun discussion of an Infrastructure Bill that would boost Federal Construction Spending. And such a bill would pass just in time for the members to leverage it for their reelection campaigns.
With Public Construction Spending ramping up, it appears the typical Election Cycle is again at play. Politicians want to show their voters they have delivered in a highly visible manner and in turn encourage their constituents to send them back to the offices that have grown so comfortable. And there is nothing like having repaved the local street that their constituent uses on a regular basis. While, unlike Africa and South America, it is illegal to pay the hometown crowd to vote for them, local PublicConstruction Spending becomes the closest thing here to Buying The Vote for getting reelected. (Data from US Census Bureau coupled with Green Drake Advisors analysis.)
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