A few people have asked me what I think of these remarks from Alice Rivlin:
In testimony before the House Budget Committee yesterday, Alice M. Rivlin, who was President Bill Clinton’s budget director, suggested splitting the plan, implementing its immediate stimulus components now and taking more time to plan the longer-term transformative spending to make sure it is done right.
“Such a long-term investment program should not be put together hastily and lumped in with the anti-recession package. The elements of the investment program must be carefully planned and will not create many jobs right away,” said Rivlin, a fellow at the Brookings Institution. The risk, she said, is that “money will be wasted because the investment elements were not carefully crafted.”
I think that’s pretty reasonable. What I don’t think is reasonable is seeing this as a major criticism of the plan that’s on the table. New infrastructure spending is a very small proportion of that plan. Given the overall size of the plan, I don’t think $0 new infrastructure is the appropriate number. Thanks to declining marginal returns, it’s worth doing some of everything. But Rivlin is right to say that we shouldn’t try to fundamentally shape the nation’s infrastructure around the needs of stimulus. And I don’t think Obama’s doing that. What would reassure me is if Obama supplemented his talk about the stimulus with a recognition that even though this week may not be the best time for a major infrastructure overhaul, that he does think such an overhaul is needed. In my opinion, we need a drastically different approach to infrastructure policy. We also need drastic short-term economic measures. It’s perfectly reasonable to think that the rethinking needs to happen at a somewhat slower pace than stimulus considerations would allow.