Infrastructure Spending Proposals
Effective infrastructure spending can promote economic growth by lowering transportation time and costs, improving access to valued services (health care, education, etc.), and reducing the environmental impacts of transportation. In light of the disparity between consistent infrastructure spending and infrastructure deterioration, it is essential to pinpoint the infrastructure areas that provide the best benefit for the cost.
Clinton’s campaign claims that for “every dollar of infrastructure investment leads to an estimated $1.60 increase in GDP the following year and twice that over the subsequent 20 years.” However, the estimate in Clinton’s proposal appears to be too high. In reality, GDP output from each dollar of infrastructure spending is about $0.80. The inflated estimates used by the Secretary Clinton will result in a much lower overall economic impact than projected.
An effective policy on infrastructure spending will focus only on projects with a clear economic growth impact and a significant benefit-cost ratio. It must place a priority on successful public-private partnership models, and fund only targeted efforts that either significantly benefit economic activity or have a clear federal role.