In light of Friday's shockingly awful jobs report, it should be more apparent than ever just how absolutely, positively psychotic it is that the United States is not spending more money on infrastructure right now.
Public construction spending, including state, federal and local projects, has been on a staggered decline since early 2009.* Yep, even with stimulus funding. In the meantime, the country has more than a million unemployed construction workers sitting around, and their industry just shed 28,000 jobs in May, at least on a seasonally adjusted basis.
The cruel irony of this situation is that there's never been a better time for us to build. The interest rates on 10-year treasury bonds just hit a 220-year low. We're paying better rates than when George Washington was running unopposed for the presidency. When inflation is taken into account, we're effectively getting paid by investors to hold their cash. And barring the possibility Europe gets obliterated in a freak super-volcanic eruption, leaving T-bills as the last asset on earth that banks can hold as collateral, chances are we're not going to see deals like this again.
But the deficit! you say. Dick Cheney is right here: The deficit doesn't really matter in this case. Most infrastructure spending is not really optional. You either fix the roads, or they fall apart. Perhaps disastrously. A 2011 study by the Urban Land Institute and Ernst & Young estimated the United States needed to spend $2 trillion to fix the country's physical plant. And unless you believe that we're going to miraculously eliminate the entire deficit in the near future, we're going to have to borrow that money at some point. We might as well do it while the financial markets are paying us for the privilege.
*For context, public spending is still very high compared to a decade ago. But back then, the country's economy wasn't being dragged down by a big gaping hole in demand.