Many members of Congress are eager to pass an infrastructure “stimulus” bill early in the Obama administration. There are many reasons to think that this is a bad idea. Such a bill is likely to do little to stimulate the economy. But it probably will do much to prolong the recovery period.
Over at Marginal Revolution, economist Tyler Cowan worries that the added debt required by an infrastructure bill will “ruin my country and cause its economy to crumble or explode.” Even if that is not true, he says, then an infrastructure project makes sense only if either the “project worth doing in its own right” or “53 percent or more of the expenditures [will] come on-line in the next nine months.”
The Antiplanner would argue that both of those should be true. If the project is not worth doing in its own right, it won’t provide much of a secondary stimulus — it will just provide a few jobs during actual construction. If the project is worth doing but not “shovel-ready,” then funding it will increase the nation’s debt but not provide any immediate stimulus.
