A couple of excellent paragraphs from Robert Frank (who is an economics professor at the Johnson Graduate School of Management at Cornell University) in his June 3, 2012 article in the New York Times - - Repairing Roads Can End All Kinds Of Gridlock:
"The same logic applies to overdue infrastructure investments, Yes, paying for them requires more government debt. And while austerity advocates fret that such projects will impoverish our grandchildren, they concede that the investments can't be postponed indefinitely, and that they'll become much more expensive the longer we wait.
Our lingering economic doldrums reinforce the case. Many skilled people who can do these jobs are unemployed today. If we wait, we'll have to bid them away from other useful work. And with much of the world still in a downturn, the required materials are cheap. If we wait, they'll become more costly. Annual interest rates on 10-year Treasury notes have fallen below 1.5 percent. Those rates will also be higher if we wait. So it's actually our failure to undertake these projects that's saddling our grandchildren with gratuitously larger debt.
By itself, the savings from accelerating infrastructure repairs won't be enough to balance government budgets. But debt is a long-run problem, and as the budget surpluses of the later 1990s remind us, the American economy at full employment can generate more than enough revenue to pay the government's bills."
Link to the Frank academic website - -