President Biden laid out his infrastructure plan in a recent address to Congress. The American Jobs Plan contains spending priorities that go well beyond traditional roads and bridges. It deserves an honest appraisal, including an assessment of the economic conditions we now face. I begin by sharing my initial skepticism.

I believe the plan is too large and happens too quickly on the heels of pandemic relief. I’m afraid it uses some inappropriate tools to address real problems. And, it tries to remedy some problems that don’t actually exist. However, there are three reasons why this proposal could be more effective than even its most ardent supporters hope. 

The first is that our economy has been stuck in low gear for more than a decade. There is growing evidence that this has some of its roots in the last recession. Despite historically low interest rates and large tax cuts, private capital investment grew very slowly. If the Fed is unable to boost the economy by easing interest rates, some fiscal policy will be needed. Hence the broad infrastructure bill.

It is important to note that the Trump tax cuts were predicated on exactly the same theory. My 2017 column supporting the Trump tax cuts noted, “We are stuck in a very slow growth expansion.” Had we not embarked on a disastrous trade war, perhaps it would have boosted growth. But, it did not. As the infrastructure bill descends into a predictable partisan divide, it is useful to know that the economic theory behind deficit spending is the same whether it comes through tax cuts or spending increases. The only real difference is how quickly the effects move through the economy. 

Second, we have some meaningful infrastructure shortfalls. While the federal government spends a great deal of money, a declining share of it targets productive infrastructure spending. There is even some evidence that the recent decline in public investment has contributed to slowing economic growth. The most widely accepted studies on infrastructure impact suggest a modest, but long-term boost to productivity from increased spending. 

Supporters of infrastructure spending will likely argue that it creates lots of jobs. That may be true, but the real benefit isn’t a five-year burst of construction work. It is the long-term effects of safer, less congested roadways, more secure power supplies, and better telecommunications networks that boosts growth. A better argument than the popular, but misguided, short-term job creation claims is that it is good investment. 

The U.S. government can now borrow money for 10 years at a negative real interest rate. Folks, that means that investors are paying the U.S. government to borrow their money. This is because there are no private investment opportunities that are safe enough to lure investors. All that may change of course, but now is a superb time to invest in public infrastructure. 

The third argument for this infrastructure untrue bill is that we may have neglected many public investments that are important, even if they aren’t measured in Gross Domestic Product. Most large American cities have water and sewer infrastructure partially built before the 20th century. Broadband telecommunications remain unavailable in many places, limiting the quality of education, public services and the delivery of healthcare and emergency services. Addressing these things won’t cause a burst of economic growth but it can reduce costs for state and local governments.

These types of investments also improve the lives of many citizens, particularly those whose economic prospects have been most challenged by longer-term changes to the economy. Some parts of the infrastructure plan, which target spending on children care and early childhood education, may help. These aren’t traditional infrastructure, but that does not make them unimportant. Our nation has yet to figure out how to reduce economic inequality that manifests itself before children enter elementary school. This program may not do so, but it is a serious effort. This program also targets more R&D spending, which is a long-term catalyst for a growing economy.

Despite my aforementioned misgivings about the infrastructure proposal, it has serious elements that address real, persistent problems in our economy. Moreover, the Biden administration propose this without dramatically expanding the scope of government. The bill contains no new big programs or agencies, no vast new government apparatus or power. It’s a lot of spending, more than I would wish, but not a new bureaucracy.

True conservatives should be pleased with that and should try to work to improve the plan. Compromise that extends the spending over a longer timeline would enable better coordination between types of construction, reduce the risk of skyrocketing construction costs and yield more long-term benefits. The childcare programs should be family based and agnostic about the type of early childhood education or childcare. We should be indifferent between spending the same amount of money on a homeschool program as we do a traditional provider. 

We should reward local governments who target their spending to support local infrastructure. We should spend R&D money on new science, and on new ways to prioritize public services, reduce barriers to economic integration and promote a stronger, more secure nation. These ideas have always been consistent with conservative principles, and should attract compromise. They probably will not. 

In the coming months, the infrastructure plan will run through the rigors of appropriations, so it will be different when finally passed by Congress. However, something like it will surely pass. It is not a panacea to all our economic woes, but neither is it socialism. We’d all be wise to view it with healthy skepticism, while hoping my hesitations about it don’t come to pass.