In an op-ed in this morning’s New York Times, Laura D’Andrea Tyson argues for increased investment in infrastructure, pointing out that the nation’s infrastructure will deteriorate quickly if spending is not increased. Tyson chaired the Council of Economic Advisers under President Clinton and currently serves on President Obama’s Council on Jobs and Competitiveness.
“Infrastructure spending, adjusted for inflation and accounting for the depreciation of existing assets, is at about the same level it was in 1968, when the economy was one-third smaller,” Tyson argues. “Financing highway projects whose economic benefits exceed their costs would necessitate more than a doubling of federal investment on highway infrastructure from its 2010 level of $43 billion.”
Government spending on infrastructure raises demand, creates jobs and increases the supply and growth potential of the economy over time. The C.B.O. says infrastructure spending is one of the most effective fiscal policies for increasing output and employment and one of the most cost-effective forms of government spending in terms of the number of jobs created per dollar of budgetary cost.
Tyson goes on to support the replacement of formulas and earmarks with performance criteria, the creation of an infrastructure bank, the development of public-private partnerships, and the implementation of congestion pricing.
Those financing tools are getting a lot of airtime in Congress these days, where the theme is “doing more with less.” But financing isn’t the same as funding. While Tyson laments the lower levels of funding likely to be approved by the House, her proposals stop short of getting to the heart of the problem and suggesting new revenues.
Without new revenues, the country has no choice but to slash spending. Right now, a bipartisan group of lawmakers is huddling with Vice President Joe Biden to cut a trillion dollars from the national budget because deficit spending over the past decade has run up $14.3 trillion in debt.
But according to David Walker, former Comptroller General of the U.S. under Presidents Clinton and Bush, “it’s not socially equitable or politically feasible to solve our problems solely with spending cuts.”
Walker says the reticence to increase taxes amounts to nothing but “deferred taxes,” which are still taxes. “People are playing a game,” he said.
Meanwhile, as lawmakers look for places to cut spending, Walker hopes they’re considering what kind of spending they’re cutting.
