More on Larry Summers, stimulus and infrastructure
Over the weekend Matt Yglesias linked to my post about heeding the pre-administration stimulus advice of Larry Summers, and to a clip of Rep. Peter DeFazio telling Rachel Maddow that Summers' advice is actually the problem.
DeFazio's comments strike me as more-or-less incoherent. This is what he had to say:
We proposed more [infrastructure spending] and I think there's a pretty good consensus among members in the House that it should be more. But the dictate from on high, and the negotiations with Obama's advisers ... I don't think the president is there. I think he's ill-advised by Larry Summers. Larry Summers hates infrastructure, and some of these other economists -- they were very much involved in creating the problem, and now they're going to solve the problem? And they don't like infrastructure.
A lot of this Summers-bashing seems really weird. (How was he involved in "creating" the economic crisis?) But DeFazio's comments are also outright false. The point about infrastructure isn't that it's inherently evil and needs to be exorcised from the stimulus bill. The point is that many -- not all -- infrastructure projects just take a really long time to complete. And if what you want is short-term fiscal expansion to boost aggregate demand, some infrastructure projects are not going to be the best option.
DeFazio should know this because Summers testified before Congress this September in support of infrastructure:
There is a compelling case for significant new commitment to infrastructure spending. While infrastructure spending is often seen as operating only with significant lags, I have become convinced that properly designed infrastructure support can make a timely difference for the economy. Evidence from the Minneapolis bridge collapse suggests that it is possible to launch infrastructure programs where the vast majority of the money is spent within a year. Moreover, the combination of declining trust fund revenues, and dramatic (more than 70 percent) increases in some categories of construction costs mean that there are a large number of projects that are currently on hold, slowed down, or contracted and awaiting funding. Properly designed infrastructure projects have the virtue of being helpful as short run stimulus, especially for the employment of the workers most hard hit by the housing decline, while at the same time augmenting the economy's productive potential in the long run.