An Urban's Rural View

Perhaps it's because I just drove 5,000 miles through 17 states and experienced how tattered America's highways have become. Perhaps it's from watching farmers struggle with deteriorating local roads and decaying locks on the Mississippi. Perhaps it's the bridges that keep collapsing.

Any of these reasons could justify more government spending on infrastructure repairs, even to someone like me who favors paring government debt. Former Treasury Secretary Larry Summers offers two other reasons.

Putting off essential maintenance burdens future generations as much as running up debt, Summers argued at a Wall Street Journal breakfast (http://tiny.cc/…). And doing repairs now beats doing them later because interest rates are low, the economy is sluggish and the government's debt load is lighter now than it's likely to be.

"The example I always like to use," Summers said, "is Kennedy Airport is going to be repaired. It is going to be repaired at some point. Potholes in roads are going to be filled. The question is whether we're going to fill them now, when we can borrow to fill them at zero in real terms, and when construction unemployment is near double digits, or whether we're going to do that years from now, when there will no longer be any multiplier benefits to those expenditures and when the deficit problem will be a more serious problem."

What about the deficit? We should commit, he suggested, to cutting longer term but spending now. Anticipating doubts that if Congress doesn't rein in deficit spending now, it never will, he responded: "But the track record going back to the Greenspan Commission of commitments made at one point that kick in some years hence is that when those commitments are made -- not always, but with very substantial probability, they in fact are kept when the time comes."

(In 1983, acting on recommendations from the Greenspan Commission, Congress voted to raise the Social Security retirement age two decades later. The retirement age has indeed been raised as promised, to 66 from 65 currently. A further increase, to 67 by 2017, is scheduled.)

Another objection was raised in a question from the floor: Why should we think infrastructure spending will boost the economy when the construction spending under President Obama's stimulus program arguably didn't do much to goose growth?

In response Summers distinguished between "fundamental visionary infrastructure investment" (building new things) and maintenance. He said politicians like the former because it's glamorous and gives rise to naming rights. Maintenance has a higher "rate of social return" because it moves faster from drawing board to completion and because it has to be done anyway.

Picking up on the point about naming rights, the Journal's moderator suggested if Summers wanted to donate to fill in a pothole, the audience would be glad to name the pothole after him and buy a plaque.

To me, Summers' key points -- that the maintenance will have to be done at some point anyway and interest rates are as low as they'll ever be -- make sense. Let's get those roads fixed.

Urban Lehner can be reached at urbanity@hotmail.com