It’s that time of year again. That glorious weekend when thousands of uniquely dressed conservatives descend on Washington, D.C. to celebrate being the political advocates for upper-class, white, heterosexual Americans.
1. We need more government spending, not less.
The U.S. is currently suffering from too little investment, not too much. As a result, economic growth remains sluggish, and unemployment is still high. Economists refer to this as a “liquidity trap,” and cutting spending, or austerity, is the wrong answer. Deficit hawks in the U.K. continue to demonstrate that austerity budgets during periods of sluggish demand push countries into recession.
The way out of a liquidity trap is increased government spending. What the economy really needs right now, according to Century Foundation and Economic Policy Institute fellow Andrew Fieldhouse, is a $2 trillion stimulus, not spending cuts. Fieldhouse suggests that an additional $2 trillion in spending could increase GDP by $8.4 trillion.
Of course, that $2 trillion needs to be invested in “high bang-per-buck” spending. Which brings us to…
2. Government spending on infrastructure helps business and creates jobs.
Government spending on infrastructure projects boosts the overall economy. The nonpartisan Congressional Budget Office says that each $1 spent on infrastructure can boost the economy by as much as $2.20.
And, as President Obama reminded us in his State of the Union address:
“Ask any CEO where they’d rather locate and hire: a country with deteriorating roads and bridges, or one with high-speed rail and Internet, high-tech schools, and self-healing power grids?”
The most promising infrastructure investments are those involving public-private partnerships – projects in which private companies team up with federal, state, or local governments. Private companies usually do the building but they also invest in the project. Century Foundation senior fellow Michael Likosky says these public-private partnerships are the main way to “drive down the cost of doing business” on major infrastructure projects.
When the government can leverage spending with private money to build public projects that grows the economy and creates jobs, it’s a win all around.
Copyright 2013 The National Memo