Yesterday, I participated in a National Journal panel discussing budget issues with Steve Bell from the Bipartisan Policy Center and Laura Peterson from Taxpayers for Common Sense. One of the exchanges got to the topic of tradeoffs, with Bell arguing that, “if you take a look at the American public, they want what they want and they don’t want to pay for it.” [1:33:00 in the video below]
My response, which I’d like to flesh out a bit more here, is that just because budgeting is all about tradeoffs doesn’t mean that win-win policies aren’t out there. One notable example is infrastructure investment, which both creates jobs in the short run and raises long-run economic growth. In fact, the situation today is especially ripe for infrastructure for a number of reasons:
Low financing costs: The cost of borrowing is at historically-low levels, with interest rates on five-, seven-, and 10-year inflation-protected securities (TIPS) actually negative. This means the markets are paying the government to borrow money. But this is a temporary situation—as the economy picks up again, private returns will increase and the government will be forced to offer more generous borrowing terms to remain competitive.
Great deals: As state and local governments remain stuck in fiscal straitjackets, private commercial construction contractors are desperate for work, and their asking prices for projects has gone down. In fact, the Department of Transportation estimates that more than 2,000 additional transportation projects were funded due to competitively low bids or projects completed under budget. In other words, we’re getting much more bang for our buck than we usually do.
Fixing infrastructure costs less than rebuilding: Neglecting our infrastructure needs only makes the cost of inevitable repair compound over time. It’s a lot cheaper to repair a bridge than to rebuild one from scratch. For every $1 spent on preventative pavement maintenance, between $4 and $10 is saved on rehabilitation.
Right now we’ve got an amazing opportunity to do something that we need to do anyway at record-low costs, we’re practically being given the money, and if we delay investments, their eventual cost will be much higher. Oh, and it will create jobs. This isn’t win-win, this is win-win-win-win.