Laura Tyson Calls for Infrastructure Investment and Job Creation

Laura Tyson, former chair of the Council of Economic Advisors under President Bill Clinton, and a member of President Obama's Economic Recovery Advisory Board (Volcker board), has called for a $1 trillion investment by the Federal government in job-creating infrastructure projects, in an op-ed in yesterday's Sunday New York Times. Warning that the debate over fiscal policy "has become skewed, with far too much focus on the deficit and far too little on unemployment," she called for a series of measures to address the economic disaster. "Two forms of spending with the biggest and quickest bang for the buck," she wrote, "are unemployment benefits and aid to state governments. The federal government should pledge generous financing increases for both programs through 2011."

Citing the well-known American Society of Engineers study, identifying $2.2 trillion in urgent infrastructure needs, she emphasized that "An increase in government investment in roads, airports and other kinds of public infrastructure would be cost-effective, too, as measured by the number of jobs created per dollar of spending... Over the next five years, the federal government should work with state and local governments and the private sector to finance $1 trillion worth of additional investment in infrastructure." She cited the Build America Bonds program which, last year, funded $120 billion in infrastructure improvement projects by the states. She also wrote, "The federal government should also create and capitalize a National Infrastructure Bank that would provide greater certainty about the level of infrastructure financing over several years." She cited interstate high-speed rail as one priority project for such a bank, that would be different than the notorious Felix Rohatyn proposal, in that it would be capitalized by the federal government, not by private capital on a for-profit basis.

Tyson argued against the austerity freaks who demand deficit reduction before any investment in job creation or real economic activity. "For now," she concluded, "the priorities of fiscal policy should be jobs and investment."