The federal government, with its wide latitude to spend on ambitious projects, is in a singular position to make investments no one else will.
But the government’s power to act has also set off a robust debate about how much more it should spend on infrastructure and how it should be funded. Spend too little, and the nation’s backbone deteriorates and the cost of future repairs mounts. Spend too much too fast, and the government could crowd out private investment, possibly leading to higher inflation and pushing up interest rates.
Today, with maintenance lacking and interest rates low, a host of influential economists, including Lawrence H. Summers, who served as Treasury secretary under President Bill Clinton, argue that America’s need for better infrastructure is so great that it could increase its debt load and still come out ahead.
In a telephone interview, Mr. Summers laid out his case: The federal government can borrow at something like 1 percent interest a year, and through enhanced productivity it would reap something like 3 percent a year in higher tax receipts.
“I am as worried about the debt burden on my children’s generation as anybody, but deferring maintenance on the foundation of our economy is a much greater risk to them,” Mr. Summers said.
Others argue that any rise in infrastructure spending should be paid for through a tax increase or budget cuts elsewhere. That view was bolstered by a recent report by the Congressional Budget Office, which concluded that while federal investment increased productivity, that did not automatically mean the nation would be better off by borrowing to fund such investment.
Decades ago, the federal government spent big. The Interstate System of highways spawned new suburbs, and transportation grants helped build rail networks like the Bay Area Rapid Transit System, whose commuter trains hum past the Port of Oakland as they travel to and from San Francisco.
Now the United States has more people and a bigger economy. But relative to its gross domestic product, the nation spends only about half as much on infrastructure as it did during the 1950s and ’60s.
The result is that, like the population itself, America’s roads, bridges and power plants are aging. That’s one reason the American Society of Civil Engineers, in its most recent report card on infrastructure, gave the United States a D-plus despite the extra infrastructure spending that flowed from the big 2009 economic recovery act.