3 Questions: Michael Greenstone on deficit spending
Government deficit spending has been a contentious issue during this year’s U.S. mid-term election campaigns. Yet some economists believe that additional government spending in certain areas is needed to help spur growth. MIT News asked Michael Greenstone, MIT’s 3M Professor of Environmental Economics, and director of The Hamilton Group, a Washington-based public-policy organization, about America’s spending priorities.Q. Due to low borrowing costs, you've likened infrastructure or research investments to finding “a 20-dollar bill laying on the ground,” yet the political tide has turned against such spending. Addressing the current opponents of deficit spending, what would you say is the best case for these kinds of investments?A. The concern about the long-run fiscal situation is encouraging, especially because the political system has seemed unconcerned about this issue for most of the last decade. However, we need to make sure that we don’t get so drunk on fiscal rectitude that we imperil...