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    Time To Borrow: Paul Krugman

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    Cristian Espinosa
    Paul Krugman argues that the U.S. government should sharply increase public investment in areas like energy, transportation, and infrastructure by borrowing more at today's very low interest rates. There is an overwhelming case for more borrowing to invest given large investment needs and low rates. Objections to borrowing and investing more are misguided as federal interest payments are only a small percentage of GDP and long-term borrowing locks in today's low rates. Government investment has historically boosted the U.S. economy through projects like the Erie Canal and Interstate Highway System. While politics may be uncertain, economically it is clear that the federal government should borrow and invest more.

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    Time To Borrow: Paul Krugman

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    Cristian Espinosa
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    Paul Krugman argues that the U.S. government should sharply increase public investment in areas like energy, transportation, and infrastructure by borrowing more at today's very low interest rates. There is an overwhelming case for more borrowing to invest given large investment needs and low rates. Objections to borrowing and investing more are misguided as federal interest payments are only a small percentage of GDP and long-term borrowing locks in today's low rates. Government investment has historically boosted the U.S. economy through projects like the Erie Canal and Interstate Highway System. While politics may be uncertain, economically it is clear that the federal government should borrow and invest more.

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    Time to Borrow Paul Krugman AUG. 8, 2016 The New York Times

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    Time to Borrow

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    Paul Krugman argues that the U.S. government should sharply increase public investment in areas like energy, transportation, and infrastructure by borrowing more at today's very low interest rates. There is an overwhelming case for more borrowing to invest given large investment needs and low rates. Objections to borrowing and investing more are misguided as federal interest payments are only a small percentage of GDP and long-term borrowing locks in today's low rates. Government investment has historically boosted the U.S. economy through projects like the Erie Canal and Interstate Highway System. While politics may be uncertain, economically it is clear that the federal government should borrow and invest more.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    26 views3 pages

    Time To Borrow: Paul Krugman

    Uploaded by

    Cristian Espinosa
    Paul Krugman argues that the U.S. government should sharply increase public investment in areas like energy, transportation, and infrastructure by borrowing more at today's very low interest rates. There is an overwhelming case for more borrowing to invest given large investment needs and low rates. Objections to borrowing and investing more are misguided as federal interest payments are only a small percentage of GDP and long-term borrowing locks in today's low rates. Government investment has historically boosted the U.S. economy through projects like the Erie Canal and Interstate Highway System. While politics may be uncertain, economically it is clear that the federal government should borrow and invest more.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
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    TIME TO BORROW

    Paul Krugman AUG. 8, 2016

    The campaign still has three ugly months to go, but the odds 83 percent
    odds, according to the New York Timess model are that it will end with the
    election of a sane, sensible president. So what should she do to boost
    Americas economy, which is doing better than most of the world but is still
    falling far short of where it should be?
    There are, of course, many ways our economic policy could be improved. But
    the most important thing we need is sharply increased public investment in
    everything from energy to transportation to wastewater treatment.
    How should we pay for this investment? We shouldnt not now, or any time
    soon. Right now there is an overwhelming case for more government
    borrowing.
    Let me walk through this case, then address some of the usual objections.
    First, we have obvious, pressing needs for public investment in many areas. In
    Washington, the aging Metro is in such bad shape that whole lines may have to
    be shut down for maintenance. In Florida, green slime infests beaches, in large
    part because failure to upgrade an 80-year-old dike or to purchase more land
    as a runoff area is forcing the Army Corps of Engineers to release polluted
    water from Lake Okeechobee. There are similar stories all across America.
    So investing more in infrastructure would clearly make us richer. Meanwhile,
    the federal government can borrow at incredibly low interest rates: 10-year,
    inflation-protected bonds yielded just 0.09 percent on Friday.
    Put these two facts together big needs for public investment, and very low
    interest rates and it suggests not just that we should be borrowing to invest,
    but that this investment might well pay for itself even in purely fiscal terms.
    How so? Spending more now would mean a bigger economy later, which would
    mean more tax revenue. This additional revenue would probably be larger than
    any rise in future interest payments.
    And this analysis doesnt even take into account the potential role of public
    investment in job creation: Despite a low headline unemployment rate, the U.S.

    economy is still probably short of full employment, and an investment agenda


    would also offer valuable insurance against possible future downturns.
    So why arent we borrowing and investing? Here are some of the usual
    objections, and why theyre wrong.
    We cant borrow because we already have too much debt. People who say this
    usually like to cite big numbers Our debt is 19 trillion dollars, they intone in
    their best Dr. Evil voice. But everything about the U.S. economy is huge, and
    what matters is the comparison between the cost of servicing our debt and our
    ability to pay. And federal interest payments are only 1.3 percent of G.D.P., low
    by historical standards.
    Borrowing costs may be low now, but they might rise. Yes, maybe. But were
    talking about long-term borrowing that locks in todays low rates. If 10 years
    isnt long enough for you, how about 30-year, inflation-protected bonds?
    Theyre only yielding 0.64 percent.
    The government cant do anything right. Solyndra! Solyndra! Benghazi! A large
    part of our political class is committed to the proposition that any and all
    government efforts to improve our lives are doomed to failure a proposition
    that turns into a self-fulfilling prophecy when these people are actually in office.
    But to hold that view you have to turn your back on our own history: American
    greatness was in large part created by government investment or private
    investment shaped by public support, from the Erie Canal, to the
    transcontinental railroads, to the Interstate Highway System.
    As for the constant harping on individual failures, all large organizations,
    private businesses very much included, engage in some projects that dont
    work out. Yes, some renewable-energy investments went bad but overall, the
    Obama administrations promotion of solar and wind has been a huge success,
    with a rough quadrupling of production since 2008. Green energy should be
    seen as an inspiration, not a cautionary tale.
    There is, in short, an overwhelming policy case for federal borrowing to pay for
    public investment. But will the next president be able to act on this case?
    The good news is that elite discourse seems, finally, to be moving in the right
    direction. Five years ago the Beltway crowd was fixated on debt and deficits as
    the great evils. Today, not so much.
    The bad news is that even if Hillary Clinton wins, she may well face the same
    kind of scorched-earth Republican opposition President Obama faced from day
    one. So it matters not just who wins in November, but by how much. Will there
    be a strong enough Democratic wave to give Mrs. Clinton the ability to act?
    But while the politics remain uncertain, its clear what we should be doing. Its
    time for the federal government to borrow and invest.
    Disponible en:

    http://www.nytimes.com/2016/08/08/opinion/time-to-borrow.html?
    rref=collection%2Fcolumn%2Fpaulkrugman&action=click&contentCollection=opinion&region=stream&module=st
    ream_unit&version=latest&contentPlacement=1&pgtype=collection

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