http://fivethirtyeight.com/features/tru ... l-succeed/
Regardless of who wins Tuesday, there's policy to be decided that isn't immigration/xenophobia.http://fivethirtyeight.com/features/tru ... l-succeed/
Short term or long term?
Some policymakers, particularly on the left, see infrastructure investment primarily as a jobs program, like the New Deal’s Works Progress Administration. In this framing, the goal of infrastructure spending is to provide a short-term stimulus that jump-starts the economy — more jobs lead to more spending, which leads to more hiring, and so on.
Many economists embraced that logic during the depths of the recession in 2008-09 and in the early stages of the recovery, when the economy badly needed a boost. But now, with the unemployment rate at 4.9 percent, the need for an immediate stimulus is less clear. Some economists, especially conservative ones, are skeptical that government spending does much to boost the economy outside of recessions. The Congressional Budget Office recently estimated that it often takes 20 years for the full effects of federal infrastructure investment to be felt.
“I think of it as a long-term economic growth issue,” said Keith Hennessey, a lecturer at Stanford and the former head of President George W. Bush’s National Economic Council. “If it increases short-term employment, great — but that’s not as important.” Short-term employment is, however, important to politicians, who want results that will help them win re-election. That difference in emphasis can have practical implications: It gives politicians an incentive to push for projects that create the most jobs quickly, rather than ones that offer the best payoff in the long term.
Build new projects or repair old ones?
A decision that policymakers face is whether to focus on building new projects or maintaining old ones. The nation’s roads, bridges and airports have a massive backlog of deferred maintenance. Many economists see that backlog as a top infrastructure priority: Economists like spending on repairs and maintenance because it’s cheaper in the long run to maintain existing infrastructure than to let it deteriorate and be forced to start over. Maintenance also takes out the guesswork — we already know which bridges and highways are the most valuable. “One of the benefits of an emphasis on deferred maintenance is that it’s done on the infrastructure that’s heavily used,” said Summers, who served in the Clinton and Obama administrations. But politicians might not play along. A new bridge or expressway is more marketable than filling potholes — hence the “bridges to nowhere” A large share of federal infrastructure spending is executed by block grants to state and local governments, which decide how the money gets spent. Some economists consider that a good thing. “Let them spend it on what they consider most important,” said Sherle Schwenninger, the founder of the World Economic Roundtable and a director at New America, a left-leaning think tank. “There will be some waste and pet projects, but a lot of them will start repairing potholes and replacing water pipes, moving power lines underground, etc.”
Politicians only want to spend in the billions, but economists want at least a trillion in spending. And that's spending on maintenance, which is cheaper, and not brand new stuff, which is pricey.
How do we pay for it?
Historically, most government infrastructure projects at both the state and federal level have been paid for with borrowed money, via government bonds. Economists often warn about the risks of too much debt. But in this case, some economists see borrowing as an argument in favor of infrastructure spending, not against it.
This argument is a bit technical, but the short version is this: The U.S. and other rich nations have been stuck in a prolonged period of low economic growth. That pattern, and the low interest rates that come with it, have discouraged private investment — why build a new factory or invest in a new project if you won’t get a decent return on your investment? Infrastructure spending, because it relies on long-term borrowing, would probably drive up interest rates, encouraging more private investment while improving the long-term productive capacity of the U.S. economy. Infrastructure investment, Summers said, “enables us to have more financial stability with the same level of demand at a higher interest rate.”
Not everyone buys Summers’s theory. But even if he is wrong, low interest rates mean that it is remarkably cheap for the U.S. to borrow money right now. That means the government can afford to borrow more than it could during a period of higher interest rates. (Of course, interest rates could always rise.)
Many politicians from both parties, however, are wary of increasing the national debt. Clinton has pledged repeatedly not to “add a penny” to the debt.
Alternately, you could leverage public money as seed money to get private money involved, like toll highways and stuff. I think that's just a corporate welfare since all it does is sell off public assets at lower prices instead of giving the savings over to the public.