Tags: Summers | IMF | infrastructure | govt

Larry Summers: Even IMF Realizes Benefits of More Infrastructure Investment

By    |   Monday, 06 October 2014 01:32 PM

Former Treasury Secretary Larry Summers has been arguing for some time that the U.S. government should increase its spending on infrastructure.

The International Monetary Fund (IMF), which traditionally advocates for fiscal austerity, wouldn't seem to be his natural ally. But in its recently published World Economic Outlook, the IMF comes out in favor of more government infrastructure spending for much of the world, Summers, now a Harvard professor, notes in the Financial Times.

"It [the IMF] asserts that when unemployment is high, as it is in much of the industrialized world, the stimulative impact will be greater if investment is paid for by borrowing, rather than cutting other spending or raising taxes," he writes.

"Most notably, the IMF asserts that properly designed infrastructure investment will reduce rather than increase government debt burdens. Public infrastructure investments can pay for themselves. . . . Infrastructure investment actually makes it possible to reduce burdens on future generations."

So how should the United States approach increasing its infrastructure investment?

Projects should be approved quickly, and the government should back private investments in sectors such as telecommunications and energy, Summers argues.

"There is for once a free lunch — a way for governments to strengthen both the economy and their own financial positions," he notes.

Meanwhile, Robert Puentes, a senior fellow at the Brookings Institution, says the United States needs a more-detailed approach to infrastructure investment. "The discussion is too abstract," he tells The Fiscal Times.

"We have very specific investments that need to be made in certain places, and we need to start talking about infrastructure in those terms. An international bridge crossing in Michigan, a clean energy transfer station in the Southeast. And we have to understand who's responsible for doing what."

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Former Treasury Secretary Larry Summers has been arguing for some time that the U.S. government should increase its spending on infrastructure.
Summers, IMF, infrastructure, govt
308
2014-32-06
Monday, 06 October 2014 01:32 PM
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