Monday, September 12, 2011

Obama jobs plan: social overhead capital [infrastructure] spending and the "pensions for potholes" argument.

In regards to the Obama jobs plan, specifically the proposed spending on social overhead capital [infrastructure], take a moment and consider the argument "pensions for potholes". Pensions for potholes is the argument that tax monies have been diverted from maintenance of social overhead capital to fund the benefits/retirement plans of public sector employees. Extending the argument into the future, more and more monies will have to be diverted from infrastructure [new and maintenance of existing] to fund benefits/retirements.

Keeping the above points in mind, one could surely make the argument that the proposed infrastructure spending is an indirect funding of public sector pensions/benefits. That is, rather than reforming the benefits/pensions of public sector employees and allowing tax monies to flow to social overhead capital, the benefits/pensions are not addressed and exogenous money is appropriated to address the problem caused by the diverted monies going to benefits/pensions rather than monies flowing to infrastructure.

No comments:

Post a Comment