Spend baby, Spend!

3/8/2011 12:26:00 PM

Johnson's Bob Frank talks to MSNBC's Rachel Maddow and pens report with fellow Cornell professor Bob Hockett about the potential economic benefits of infrastructure spending

Johnson Professor of Economics Bob Frank recently spoke with MSNBC's Rachel Maddow (Frank appearance begins at approx. 6:13 of THIS CLIP) in support of targeted infrastructure spending to boost U.S. economic growth.  To those who suggest that this type of spending would dangerously neglect needed deficit reduction, Frank says that an injection of funds into short-term, specific projects will help the deficit long-term.  Says Frank, "The deficit is not an artificial problem, but it is a long term problem."

His arguments are also a part of a Cornell-funded federal report issued by Frank, Cornell Law Professor Bob Hockett and University of Delaware Professor of Economics, Larry Siedman that argues the merits of targeted infastructure spending to help stabilize the American economy and, long-term, reduce the deficit. 

The three scholars argue that recent growth in U.S. government debt has drawn concern from some economists, policy analysts, pundits, politicians, and members of the lay public. Current trends, they fret, are not indefinitely sustainable – and might not even be sustainable for longer than the near term future. 

Frank, Hockett and Seidman believe that well chosen public infrastructure investments made now – while borrowing costs are low, capacity is much underutilized, and current degrees of depreciation are substantially lower than future such degrees of depreciation are likely to be – would generate measurably significant gains to macroeconomic growth and employment rates, while also generating federal revenue increases partly offsetting the expenditures themselves.

The report also suggests that benefits and cost-savings are less measurable owing to lack of economy-wide data, but no less substantial for that. To realize them is to avoid significant implicit costs, both public and private.

For the complete report contact Public Relations at Johnson
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