Fmr. Comptroller General: We Can’t Solve Our Problems With Spending Cuts

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 investment creates 11,000 to 30,000 jobs per $1 billion spent. Isn't that a better way to grow the economy and reduce the deficit than spending cuts? Photo: ##http://www.freefoto.com/preview/2033-10-1/Nottingham-Express-Transit-Under-Construction##FreeFoto##

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.

“We need to cut back on consumption-oriented spending and spending relating to programs and policies that aren’t working,” Walker said. “And there are plenty of opportunities to do that. At the same time, there are some areas that are Investment-oriented that we need to be allocating more revenues. Critical infrastructure is one of them.”

Still, it’s “T minus two months” and the clock is ticking for lawmakers to come up with enough spending cuts to meet Republican conditions for approving a raise in the debt ceiling. Walker says it’s anyone’s guess whether the negotiators are being precise enough with their proposals to spare investment-oriented spending that will create jobs and grow the economy.

Laura D’Andrea Tyson, in her op-ed, also calls for a more surgical approach to spending cuts. The heated debate in Washington about how much and how fast to slash government spending is overlooking how a significant, sustained increase in infrastructure investment would create jobs and strengthen the nation’s competitiveness,” she wrote. Every billion dollars in infrastructure spending creates between 11,000 and 30,000 jobs, she adds.

Lawmakers say they don’t want to raise the gas tax in the midst of a recession. But how are we ever going to get out of the recession without the kinds of investments that create jobs and economic growth?

ALSO ON STREETSBLOG

NTPP: Infrastructure Investment Will Only Boost the Economy If Done Right

|
At the federal level, we’re nearly flat out of transportation money and spending most of what’s left to stimulate highway construction jobs. It’s a double whammy that could present a bleak future for federally-funded transportation projects. A new report by the Bipartisan Policy Center’s National Transportation Policy Project (NTPP) challenges the country to envision a […]

What to Look For in President Obama’s Budget Request on Monday

|
On Valentine’s Day, President Obama’s heart-shaped box of chocolates to Congress will come in the form of his budget request for 2012. It will include the president’s proposal for a six-year transportation reauthorization. The FY2012 budget request comes as Congress is still wrangling over the budget for the rest of FY2011 (which, by the way, […]

Obama Takes Another Swing at $50 Billion in Infrastructure Spending

|
President Obama is pressing for infrastructure investment again as part of the fiscal cliff negotiations. The president kicked off talks calling for an end to the debt ceiling, the extension of middle-class tax cuts, and $50 billion in infrastructure spending — a proposal that first arose last year as part of his ultimately unsuccessful American […]

Voinovich Has a Job-Creation Proposal for the President

|
Before leaving for Asia yesterday, President Obama announced a job creation summit to take place next month and declared himself "open to any demonstrably good idea" to cut the rising unemployment rate. Sen. George Voinovich (R-OH) (Photo: UPI) Taking the president at his word, Sen. George Voinovich (R-OH) fired off a letter today with a […]

Obama’s 2014 Transpo Budget Calls for Higher Spending, HSR

|
The Obama Administration has put forward an opening bid in what are sure to be contentious 2014 budget negotiations, issuing a solidly progressive transportation budget that calls for increased overall spending and continued investment in passenger rail. The $76 billion transportation budget would represent a 5.5 percent, or $4 billion, spending increase over 2012 levels. […]

White House Economic Report Touts TIGER, High-Speed Rail, Transit

|
The White House Council of Economic Advisers’ first annual report under President Obama made headlines today for its gloomy job-creation outlook, but tucked inside its 462 pages is a tangible reflection of a changed outlook on transportation policy under the new administration. Top White House economic adviser Christina Romer, at right, holds up yesterday’s report. […]