Physical Infrastructure Investments

According to The Wall Street Journal, "Fed and Treasury officials have identified the disease. It's called de-leveraging, or the unwinding of debt. During the credit boom, financial institutions and American households took on too much debt."  But let's not buy into a false equivalence of "financial institutions" and those "American households" borrowing beyond their means.

As Congress debates a stimulus to the economy in the wake of the housing bust, many economists are urging federal leaders to make aid to state governments a core part of the package. While direct tax rebates for individuals can help, it will not do much for the economy if states are forced to cut back on critical spending on public works, health care, and education at the same time. As Nobel prize-winning economist Joseph Stiglitz, who was also chair of the President's Council of Economic Advisors in the 1990s, wrote this week in the New York Times:

After discussing the possibility of privatizing major state highways last year, New Jersey Governor John Corzine instead made a proposal earlier this month that called for significant increases in tolls that would provide nearly $30 billion to decrease state debt and invest in state transit projects. Unlike rhetorical promises around privatization money in other states, this plan actually laid out how money would get raised. 

Last week, an explosion beneath a street near Grand Central Terminal in midtown Manhattan sent a giant stream of scalding, brownish steam up through the street and into the sky. The explosion caused a large crater, roughly 35-40 feet wide, and was so strong that it flipped over a tow truck. The cloud of steam and hail of debris from the explosion lasted more than two hours and raised concerns of asbestos contamination. The cause of the blast? Not as some rushed to assert, a terrorist attack, but an underground steam pipe constructed in 1924 that exploded when too much cold rain water leaked on it. New York City Mayor Michael Bloomberg acknowledged this when he stated, "There is no reason to believe this is anything other than a failure of our infrastructure."