Nobelist Krugman Joins Call for Federal Transportation Spending

ts_krugman_190.jpgFor decades, groups like Build for America have made a strong case that transportation spending has to increase. They have rightly warned that the U.S. transportation network is falling apart, with bridges failing and transit systems lagging behind international competitors. But wars, tax cuts and social priorities have stymied increased investment.

Now, as the country teeters on the edge of a dire recession, increased transportation spending is starting to look like a core building block in a federal stimulus package that would, ideally, bring about job creation, increased international competitiveness and improved environmental sustainability. Today, Nobel Prize winning economist and New York Times columnist Paul Krugman helped make the case, using the kind of "fix it first" and pro-transit examples promoted by Build for America at Wednesday’s press conference.

And this is also a good time to engage in some serious infrastructure spending, which the country badly needs in any case. The usual argument against public works as economic stimulus is that they take too long: by the time you get around to repairing that bridge and upgrading that rail line, the slump is over and the stimulus isn’t needed. Well, that argument has no force now, since the chances that this slump will be over anytime soon are virtually nil. So let’s get those projects rolling.

Photo: Fred R. Conrad/The New York Times

  • Larry Littlefield

    “The usual argument against public works as economic stimulus is that they take too long: by the time you get around to repairing that bridge and upgrading that rail line, the slump is over and the stimulus isn’t needed. Well, that argument has no force now, since the chances that this slump will be over anytime soon are virtually nil.”

    Sad but true. But what is sadder is that there may be no money, as the U.S. has already borrowed its way to bankruptcy.

    Examples — the MTA being unable to borrow money this week, and mortgage and long term bond rates rising due to the amount the federal government will have to borrow for the bailout.

    That bailout is for failed loans on McMansions and SUVs. We have have already spent all we have on infrastructure, and that’s it.

  • Boris

    Larry,

    I don’t think it’s all bad. If we can spend $10 billion a month on Iraq, we can spend $1 billion a month on transit. And since new infrastructure helps the economy, we’d be able to repay the loans quicker.

  • I personally love the “excuse” that an economic downturn provides to invest in infrastructure. What’s the downside? We employ people. It helps the long-term vitality of our cities. If you’re lucky enough to live/have a business near a project: convenience, followed by increased property value. Deficits? Well, if we don’t do anything, and on the other end of this financial crisis we still find ourselves as beholden to oil as ever, as dependent on the auto as ever, and with a crumbling infrastructure….Well, let’s just say the economy would probably have a tough time in those circumstances. And a struggling economy = decreased tax revenue = deficit spending. If the result is going to be the same, we might as well produce something of value in the meantime – it’s a better option than standing idly by and gnashing our collective teeth. Am I wrong?

  • Larry Littlefield

    Let me tell you, it’s that bad. The worst case scenarios are beyond belief. What if the rest of the world started pulling out of U.S. assets?

    Let’s hope it doesn’t happen.

    But I will say this. Starting a decade from now there will be ZERO infrastucture investment, because the growing number of senior citizens will capture every last dime.

    Anything that is “deferred” is gone forever.

  • I am dubious: the longest recession since the end of world war II lasted one and a half years, and very few people think this one will last any longer than that. I doubt that there are many transit projects that have gone through the planning process and are ready to start construction, but there are lots of road projects that have gone through planning and are ready to start construction. Krugman doesn’t distinguish: he thinks building infrastructure is a good thing, period, including building more roads.

  • Larry Littlefield

    Charles, you sound like you agree with me — we’d be better off getting rid of all federal infrastructure (and housing) spending and related subsidies. Almost everything the federal government has done in these areas has been botched.

    People move, so you need the federal government to direct money to them. Buildings and infrastructure do not, so states and localities have an incentive to take care of their own.

    If you read my Room 8 posts on federal policy in January, you know my choice would be a universal health care system at the federal level. This would same state and local governments $trillions by getting rid of Medicaid, and paying for a large part of employee and retiree health care.

    Among the ways to pay for it would be to get the federal government out of whole functions like this one. Heck, I don’t even want my infrastructure money redistributed at the state level, let alone the national level.

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