Infrastructure 101: Stimulus Isn't a Dirty Word

Legions of construction workers remain unemployed while we drive our cars over pothole-laden roads. Does this make sense?

By ALAN S. BLINDER, WSJ

A debate now rages in Europe over whether fiscal austerity—that is, higher taxes and less spending—helps or hinders growth. That's progress of sorts. Not long ago, European policy makers seemed stuck on the notion that austerity promotes growth. Yes, we were supposed to believe that countries grow faster when their governments spend less and tax more.

Events in Europe seem to have dashed that idea. But a similar debate rages here in the U.S.—with the lone exception that our pro-austerity crowd abhors tax increases. It's a highly partisan debate, too, the sort that an election should decide.

Many Democrats, including President Obama, want to help state and local governments maintain their spending, which has now dropped 6.4% since its 2008 peak—and is still falling. Most Republicans reject that idea, even when it saves the jobs of teachers, fire fighters and police officers.

Many Democrats also want to build and repair more roads, bridges, tunnels and the like—taking advantage of the rare combination of historically low government borrowing rates and historically high unemployment among construction workers. Most Republicans reject that idea, too, even though the argument for more public capital is the same as the argument for more private capital—each promotes growth.

(More here.)