BUSINESS CASE: Priming the Pumps

In the old days, when fewer Americans had cars but many more people lived in rural areas and drew their water from wells, advocates of fiscal expansion used different metaphors. Instead of talking, as President Obama did, about giving the economy a “jump start,” they’d talk about “priming the pump.” You see, it was often necessary to add water to old-fashioned hand pumps before they would work; similarly, people would argue, you need to add funds to the economy before it will get back to producing jobs and income.

Courtesy Garney Companies, Inc.

In the case of the Obama stimulus, priming the pump was more than a metaphor: some of the most obvious beneficiaries were companies that made… pumps. The Recovery Act allocated $7 billion for drinking-water and wastewater projects, creating a number of new opportunities for companies in the business of moving water around.

A case in point was Garney Construction, a Kansas-City-based company specializing in water and sewage projects whose slogan is “Advancing Water.” By the summer of 2009, Garney had won contracts to work on nine water- and sewer-related projects that were being financed in whole or in part by the Recovery Act.

None of these infrastructure projects were dreamed up as ways to spend more money; they were all things that state or local governments had been planning to do eventually. “I think most of these projects were sitting on a shelf, waiting for funding,” Garney’s president told a local business journal.

Although the stimulus was good for Garney, it was not exactly a financial gusher. In 2007, the United States spent about $100 billion on water-supply and wastewater infrastructure; the extra $7 billion coming from the stimulus, not all of it coming in one year, was basically a, well, drop in the bucket by comparison. Indeed, Garney said that only about 10% of its business was coming from stimulus money. And despite the stimulus, the company had less business than it had two years earlier.

Still, Garney and other companies in the water-infrastructure business were clearly getting some benefit from the Recovery Act.