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deficit good (NIB spec.)Deficit spending from NIB is based in capital spending, which is good for the economy Skidelsky 12-Professor Emeritus of Political Economy @ Warwick University, Fellow of the British Academy, Chairmen of the Governors of Brighton College [Robert, The Age, “Spending Can Lift Us All,” 2/28/2012, LexisNexis, DKP] Good government deficits have their place in society, writes Robert Skidelsky. 'DEFICITS are always bad," thunder fiscal hawks. Not so, replies strategic investment analyst H. Woody Brock in a new book, The American Gridlock. A proper assessment, Brock argues, depends on the "composition and quality of total government spending". Government deficits incurred on current spending for services or transfers are bad, because they produce no revenue and add to the national debt. Deficits resulting from capital spending, by contrast, are - or can be - good. If wisely administered, such spending produces a revenue stream that services the debt; more importantly, it raises productivity, and thus improves a country's long-run growth potential. From this distinction follows an important fiscal rule: governments' current spending should be balanced by taxation. To this extent, efforts nowadays to cut deficits on current spending are justified, but only if they are replaced by capital-spending programs. Brock's argument is that, given the state of its economy, the United States cannot return to full employment on the basis of current policy. The recovery is too feeble and the country needs to invest an additional $US1 trillion a year for 10 years on transport and education. It should have a National Infrastructure Bank to provide the finance by borrowing directly, attracting private-sector funds, or a mixture of the two. inflation specificPlan won’t be inflationary—extra spending will be too low Spring, 12 (Ian Spring—economist/manufacturing general manager who is a proponent for further planning of infrastructure solutions, The National Forum, ON Line Opinion, “We must borrow and build infrastructure,” 19 June 2012, http://www.onlineopinion.com.au/view.asp?article=13755&page=1, MH) Tens of thousands of new steady direct and indirect jobs would be generated: most of them in the job hungry southeast of the country. We would have a three-speed economy, with infrastructure spending being the third, steady, speed. Productivity and standards of living would increase enormously. The sale of Federal Bonds will be welcomed by financial markets, and would provide a steady investment base, denominated in Australian dollars, for Australian superannuation monies. Other benefits would include major support for the building and construction industry, for PPP investors, and the program would maybe reduce the need for privatisation sell-offs. If this borrowing program is to be achieved politically we must accept that in the present circumstances there will be widespread fear of using federal debt to fund infrastructure. In fact, most commonly held fears are without foundation. Fear that spending will affect building costs and inflation Effect on total demand should not be significant as extra spending of the program will only be around .6 per cent of GDP each year, this is tiny when compared with expenditure on the current resource infrastructure boom. Since most of the expenditure in the program would occur after the mining infrastructure boom, skills and capacity should be available, so there should be limited inflationary pressure on building costs. Disregard the crowding-out argument, it is mostly hot air. Plan is non-inflationary and would be a net increase in tax revenue from new growth Spring, 12 (Ian Spring—economist/manufacturing general manager who is a proponent for further planning of infrastructure solutions, The National Forum, ON Line Opinion, “We must borrow and build infrastructure,” 19 June 2012, http://www.onlineopinion.com.au/view.asp?article=13755&page=1, MH) Fear that extra borrowing would increase interest rates in the credit market. Concern about the effect of capital raising on interest rates would have been appropriate before the world became globally interconnected. Investment in Australian bonds now comes from around the world, and the effect of bond sales on domestic inflation should be negligible. Raising funds committed to patently sound economic infrastructure will only improve our credit ratings. Fear that debt-servicing costs will impact the budget Debt servicing costs would be moderate, around .06 per cent of GDP, and these would reasonably quickly come to offset by the boost to GDP and taxes the new infrastructure would bring. In the long-term successful infrastructure investments will bring a ‘profit’ to the budget. Also, a commonly overlooked benefit is the income tax paid by those building the infrastructure, this could be 10 to 20 per cent of the total cost, and would almost certainly cover interest servicing costs during building. bond specificLong term bonds don’t increase debt—they boost economic efficiency with immediate projects in the short term Spring, 12 (Ian Spring—economist/manufacturing general manager who is a proponent for further planning of infrastructure solutions, The National Forum, ON Line Opinion, “We must borrow and build infrastructure,” 19 June 2012, http://www.onlineopinion.com.au/view.asp?article=13755&page=1, MH) Fear that interest rates increase sharply and this will put pressure on the budget All bonds sold for infrastructure should be long-term, so cyclical interest-rate increases should have low or no effect on the program. Another perennial fear is, doesn't all this involve government making choices? Surely this question reflects a lack of self-confidence and courage on the part of those raising this question. Or perhaps it is only pure-market ideology, where choices made by government rather than the market are automatically ‘illegitimate’? Only government can make some of the choices necessary. The market cannot make choices in relation to projects that are essential but which, nonetheless, cannot show enough ticket, toll income to justify private expenditure. Obviously, in these cases government contributions to individual projects could be made available through the program. Also, the very substantial machinery established through Infrastructure Australia and Infrastructure NSW will give good assurance against silly decision-making. Have we enough guts and common sense grab hold of this opportunity? The carefully controlled federal borrowing program suggested offers a straightforward, and relatively easy to explain, solution to our major infrastructure problems. State and federal budgets are under extreme pressure, state borrowing is fading, and private investment funds are scarce, so traditional methods of providing monies for infrastructure are drying up. We need some extra source of funding. My proposal is for a prudent federal borrowing and building program, which should solve our major infrastructure problems within 20 years, with no increase in national net debt as a proportion of GDP. Net National debt will peak this year at just under 10 per cent of GDP, a very safe figure. GDP grows at 6 per cent per annum, 3 per cent real growth and 3 per cent inflation. Rather than just letting net debt melt away as a percentage of GDP as GDP grows, the federal government should borrow enough each year to keep the debt at 10 per cent, and commit these new borrowings to spending on infrastructure. This program would generate some $9 billion in the first year, and, in current dollar terms, $90 billion in the first 10 years, and $200 billion in the first 20 years. This 20-year total could grow to $300 billion when coupled with other funds, on perhaps an 80-20 basis with the states, and up to 50 per cent free federal funds into individual PPPs. The $300 billion figure would match infrastructure Australia's estimate of investment needed on infrastructure. The whole process should be easy to subject to transparent public audit. Access to Federal borrowing would mean that, perhaps for the first time in our history, funding would not be the limiting factor on infrastructure building. The benefits of such borrowing and build program would be enormous. It would permit the construction, within a generation, of a majority of the infrastructure projects on the various states’ wish lists. We would become a much more efficient country, and still have debt at only 10 per cent of GDP. Within the first 20 years, desperately needed projects such a satisfactory heavy rail system across Sydney, including a new harbor rail crossing, both the Parramatta-Epping and North West rail links, Sydney expressway linkups, the port linkups in Sydney, major interstate rail links, including the Melbourne-Brisbane Central Western Link, fixing the Bruce Highway, and corresponding projects all around the nation would all be either completed, or well on their way to completion. Commuters across the country would see things happening almost immediately. With the provision of new expressways and new urban rail in all major cities, they would start to get worthwhile relief from the daily grind of traffic gridlock within the first 10 years. Tens of thousands of new steady direct and indirect jobs would be generated: most of them in the job hungry southeast of the country. We would have a three-speed economy, with infrastructure spending being the third, steady, speed. 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