FOR IMMEDIATE RELEASE
May 13, 2021
Maddy McDaniel, Communications Director
[email protected] or 914-471-7716
GROWING CALLS FOR DEFICIT-FINANCED INFRASTRUCTURE FROM LAWMAKERS, ECONOMIC EXPERTS
Rep. Don Beyer (D-VA): “Regardless of the exact set of options we use to pay for these investments, their returns will be greater than the opportunity costs of financing them.”
Sen. Jon Tester (D-MT): “I think we need to pay for part of it on the infrastructure angle … but not totally.”
Roosevelt Institute: “Instead of matching additional spending to restrictive revenue-raising offsets—“pay-fors”—the federal government can take on necessary additional spending through the deficit.”
Economic Experts Agree that Infrastructure Investments Grow the Economy and Can Reduce the Debt
Large Majorities — Including Independents — Support American Jobs Plan Whether Funded Through Corporate Tax Hikes And/Or Deficit Spending
WASHINGTON, D.C. — As President Biden meets with bipartisan leaders in Congress to discuss the American Jobs and Families Plan, lawmakers and economic experts are increasingly calling for the plan to be funded at least in part by deficit financing.
In a recent letter to the House Budget Committee, Joint Economic Committee Chairman Rep. Don Beyer (D-VA) argues that deficit financing, in addition to progressive revenue-raising options like a corporate tax rate increase, is a fiscally responsible way to fund President Biden’s agenda because the investments in the American Jobs and Families Plan will grow the economy and create millions of good-paying jobs.
Beyer joins other lawmakers and economic experts who have advocated for the American Jobs and Families Plan to be funded at least in part through deficit financing.
- Appropriations Committee member Sen. Jon Tester (D-MT) advocated for a mix of funding options, saying, “My view is I think we need to pay for part of it on the infrastructure angle … but not totally.”
- Yesterday, the Roosevelt Institute released a new economic analysis of the advantages of deficit-financed infrastructure, arguing that the country’s current economic conditions allow for ample deficit financing with “no risk of a debt spiral.”
Key points from Rep. Beyer’s letter include:
“Investing in our physical and human infrastructure will increase and enhance the two primary inputs of economic growth—capital and labor.
“Therefore, these investments will increase our economy’s future potential output and improve future economic growth prospects. Regardless of the exact set of options we use to pay for these investments, their returns will be greater than the opportunity costs of financing them.”
Voters support the American Jobs Plan whether it’s funded through deficit financing or a corporate tax rate increase:
- 69% of voters support the American Job Plan when it is paid for by a mix of adding to the national debt and raising taxes on large corporations by a +45 point margin — including 45% of Republicans and 70% of Independents.
- 69% of voters support the American Jobs Plan when it is paid for by raising corporate taxes by a +43 point margin — including 42% of Republicans and 67% of Independents.
Experts agree that in the long term, investing in infrastructure grows the economy and can reduce the debt.
“Infrastructure pays for itself if it’s done wisely. It’s the grease that keeps the economy moving along.”
International Monetary Fund: IMF Survey: The Time Is Right for an Infrastructure Push
“The study finds that increased public infrastructure investment raises output in the short term by boosting demand and in the long term by raising the economy’s productive capacity.
“In addition, the boost to GDP a country gets from increasing public infrastructure investment offsets the rise in debt, so that the public debt-to-GDP ratio does not rise.
“For economies with clearly identified infrastructure needs and efficient public investment processes and where there is economic slack, there is a strong case for stepping up public investment.” [IMF News, 9/30/14]
Former Treasury Secretary Larry Summers: Invest in infrastructure that pays for itself
“Most notably, the IMF asserts that properly designed infrastructure investment will reduce rather than increase government debt burdens. Stated boldly: Public infrastructure investments can pay for themselves.
“What is crucial everywhere is the recognition that in a time of economic shortfall and inadequate public investment, there is a free lunch to be had — a way that government can strengthen the economy and its own financial position. The IMF, a bastion of ‘tough love’ austerity, has come to this important realization. Countries with the wisdom to follow its lead will benefit.” [The Washington Post, 10/7/14]
Visiting Faculty In Economics At Emory University Sheila Tschinkel and Professor Of Finance Emirata At The University of Colorado Denver Marcelle Arak: An investment in America’s infrastructure could cost taxpayers nothing
“Now is the right time for a substantial program of greatly needed public infrastructure investment. One of the main objections to this kind of investment – the growth of the federal budget deficit that temporarily results from more spending on infrastructure – is not worrisome because of the gains in economic productivity and potential output. Indeed, it will pay for itself over time: if the real cost of financing the borrowing is close to zero and the return is well above zero, it is as if we are being paid to do this. Let’s not reject a ‘free lunch.’” [Fortune Magazine, 10/8/15]