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| Source: http://www.economist.com/blogs/dailychart/2011/09/government-bonds |
It also means it's time to invest, heavily. I've said it before and I'll say it again, the federal government needs to borrow money right now because the rates are good and the need for infrastructure improvement is great. If private industry insists on sitting on a stack of cash, then the government should step in. It isn't going to cost us very much in the future.
9 comments:
Heck, why not make the deficit an even $2 trillion? It's only money, right?
Meanwhile, you may want to read this.
Given the rates and the targeted rate of inflation, we'd be paying around 1% over the face value of the bond in ten years time. We will need to invest at some point, why not do it when it's cheap?
Getting infrastructure projects moving has become cumbersome and inefficient, I agree with you on that. Though I have a feeling we'd disagree on how to fix that. Regardless of how you make infrastructure investment more efficient, it is fact that making that investment right now is cheap relative to other moments in our history.
If we need infrastructure spending, why not cut the budget elsewhere to free up money for it? Why dig ourselves deeper in the hole?
Furthermore, why is this a federal responsibility? Isn't the majority of infrastructure a local or state issue?
Presumably that money is needed where it is allocated and infrastructure projects are less short-term in both their construction and the return on the investment. Like a home owner who takes out a loan on good terms to plan for an expanding family, so too can the government take out a loan to expanding cities.
I haven't looked a the figures, but I would imagine the federal government can get better terms on the loan then a local or state government. Also, many larger projects cross jurisdictions and the federal government can help alleviate coordination issues.
And it's worth mentioning many states are in banged up economic shape because they don't have the same level of flexibility the federal government does. Any such infrastructure investment should come with input from state and local governments, but let's not pretend that the nation's infrastructure is solely the purview of state and local governments. If it were, the drinking age may well still be 18.
Why should we presume it is needed where it is allocated? Is it reasonable to think that the federal government is operating at 100% efficiency, with every dollar absolutely needed? Why can't dollars be re-prioritized?
Is there evidence to support your contention that the federal government is needed to coordinate infrastructure among states? WMATA involves the governments of VA, MD and DC and is able to operate without a federal coordination role. Ditto for the NY/NJ Port Authority. In fact, it seems more plausible that the addition of yet another bureaucracy would decrease efficiency, not increase it.
You are no doubt correct that infrastructure is not the sole purview of the states and local government, but the question is why this should be the case. The fact that the federal government has run roughshod over them and forced the nonsensical 21 drinking age is yet another reason to be skeptical of this approach.
This is the same WMATA that struggles every year to cover expenses because Virginia doesn't like paying its fair share. I assume your solution would be to stop service at the Potomac?
My point on the drinking age was that the states caved because they had to. They quite simply need that money to keep the roads in anything resembling good working order.
No, my solution would be to privatize WMATA and let consumers bear the costs for its operation directly instead of government.
As for the feds and highways, where do you think the money originates? Among the citizens of the states. If the feds didn't take so much of the money the states would have more to spend themselves and wouldn't need handouts from DC.
But there are spillover benefits to a system like WMATA. Less traffic, means less wear and tear on roads (regardless of who pays for them), less pollution, and better quality of life. These are hard benefits to apportion to each individual, but they are real benefits.
And you're talking out of both sides of your mouth. The money for WMATA comes from the same place the money for roads come from, the people. Schemes like roads and public transportation have diffuse but real benefits for all, so why should all the cost be shifted to those that choose to ride? How do resolve the free-rider problem?
As to where the money comes from, you appear to advocate lowering the federal tax rate so the state and local tax rates can be raised to pay for infrastructure. There may be some merit to that.
But there are spillover benefits to a system like WMATA. Less traffic, means less wear and tear on roads (regardless of who pays for them), less pollution, and better quality of life. These are hard benefits to apportion to each individual, but they are real benefits.
And? Why is that a reason not to privatize?
And you're talking out of both sides of your mouth. The money for WMATA comes from the same place the money for roads come from, the people. Schemes like roads and public transportation have diffuse but real benefits for all, so why should all the cost be shifted to those that choose to ride? How do resolve the free-rider problem?
How am I talking out of both sides of my mouth? And how is there a free rider problem? Who is getting the free ride?
In fact I am arguing that we should end the subsidized ride that WMATA users currently receive. If you go over to wikipedia they even define an example of free riding as "someone using public transportation without paying the fare."
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