NCPA - National Center for Policy Analysis

Infrastructure Spending

February 10, 2011

Everybody supports infrastructure.  Liberals love it because it is big government and big spending at the same time.  Conservatives acknowledge that in a market economy there will be a targeted role for government activities like national security, infrastructure, primary education and basic research that has economy-wide benefits.  The discussion on infrastructure, however, has become unhinged from reality, says Douglas Holtz-Eakin, president of the American Action Forum.

First, it is not about the jobs.  Looking back, would it make sense to judge the impact of the interstate highway system by the construction jobs it created?  Of course not.

  • The interstate had broad, economy-wide productivity benefits and it enhanced the consumption of American families.
  • These are durable national benefits by which an infrastructure program should be judged.

Second, federal infrastructure spending should be about national benefits.

The third point is that infrastructure can provide either consumption benefits or productivity benefits.

The final aspect of infrastructure is that how it gets used and maintained is often more important than building it:

  • The liberal bias against public-private partnerships that provide efficient management or user-fees that reveal valuable projects versus dubious ones needs to be put behind us.
  • Infrastructure policy should not be about the spending; it should be about the services infrastructure provides and pricing schemes that value those services and provide resources to fund their maintenance.

Source: Douglas Holtz-Eakin, "Puppies, Kittens, Sunshine and Infrastructure," Daily Caller, January 31, 2011.

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