Rep. DeFazio: ‘I Think Obama Is Ill-Advised By Larry Summers. Larry Summers Hates Infrastructure’

Earlier this week, Rep. Jim Oberstar (D-MN) explained that funding for mass transit infrastructure projects was nixed from the stimulus proposal in order to make room for tax cuts. Despite the fact that tax cuts already comprise a bulky 33 percent of the stimulus (compared to only 7.5 percent for transportation infrastructure), conservatives are pressuring President Obama to include even more.

Tonight on the Rachel Maddow Show, Rep. Peter DeFazio (D-OR) said the amount of infrastructure spending in the legislation is “not enough.” He argued that if the Republicans are recycling failed ideas of the past, “we don’t need to buy them off with $300 billion in tax cuts.” DeFazio said Democrats in Congress originally proposed more for infrastructure spending, but the effort was shot down by Obama advisers:

There’s a pretty good consensus among members of the House that it should be more. But the dictate from on high in the negotiations with Obama’s advisers — I don’t think the President is there — I think he’s ill-advised by Larry Summers. Larry Summers hates infrastructure, and some of these other economists — who were very much part of creating the problem. Now they’re gonna solve the problem. And they don’t like infrastructure.

They want to have a consumer-driven recovery. We need an investment- and productivity-driven recovery for this country, a long-term recovery.

Maddow noted Obama speaks “very highly” of infrastructure. “If there’s a distance between him and his advisers,” she said, then that’s a problem. DeFazio responded, “He needs to know it, and that’s why I’m speaking out.” Watch it:

DeFazio is right about the value of infrastructure. Significantly more “bang for the buck” comes from direct investment in infrastructure than from any type of tax cut. One dollar invested in infrastructure has a return of $1.59 in GDP growth, while most tax cuts don’t even return 50 cents.


DeFazio is also right about the need for a productivity-driven stimulus package, one that meets short-term and long-term economic needs. As Nobel Prize-winning economist Paul Krugman explained simply, “The one thing we know is that the good thing about federal spending is it’s actually spent, that it actually does boost the economy. And if it’s infrastructure, it also leaves you with something of value afterwards. Whereas if you do it the way the Republicans want to do it, which is always tax breaks, first of all, it might not be not be spent or it might not help the economy at all. And then, you’ve got nothing to show for when the thing is over.”


In December, Summers wrote: “Investments in an array of areas — including energy, education, infrastructure and health care — offer the potential of extraordinarily high social returns while allowing our country to address some long-standing national challenges and put our economy on a solid footing for years to come.”

And in June, he wrote: “There is now also a case for carefully designed support for infrastructure investment, as financial strains have distorted the municipal credit markets to the point where even the highest-quality municipal borrowers are, despite their tax advantage, paying more than the federal government to borrow. There are legitimate questions about how rapidly the impact of infrastructure spending will be felt. But with construction employment in free fall, there will be a need for stimulus tied to the needs of less educated male workers for quite some time.”