Fareed Zakaria makes the case that since we need infrastructure anyway, we may as well borrow at near zero interest to make it happen:
In the long run, you cannot have robust growth without strong infrastructure. The U.S. has historically been world class in this regard. Only a decade ago we were ranked fifth in overall infrastructure by the World Economic Forum; today we have dropped to 25th. The American Society of Civil Engineers calculates that we have a $2 trillion backlog of repairs that must be done over the next five years to stay competitive.
Hurricane Sandy should give us a sense of urgency about these projects. Our crumbling levees, roads, subways and bridges are not just barriers to growth; they are dangers to our lives. We are simply not prepared for a world in which there will be sharp increases in hurricanes, tornadoes, droughts and perhaps even earthquakes. We could use concern about these threats to build a new and more resilient system, including most vitally a new energy and information grid, so that we are protected from nature, resilient in hardship and poised for growth.
Properly done, such a program would also save billions. Before Katrina, the New Orleans water system was losing 30% of its treated water in leaky pipes. (Around the U.S., this percentage is about 25%.) A new system could be far more efficient and detect leaks almost instantly. In almost every area, new technologies would reduce waste in energy, water and time…
…In the first debate, Romney made a smart and eloquent case for caution with regard to government spending. He explained that he thought any new government spending should pass this test: “Is it worth borrowing from the Chinese to pay for it?” I would argue that a national bank to rebuild America and give it a 21st century infrastructure passes this test with flying colors. In fact, right now, people everywhere are willing to lend money to the U.S. at rates that are lower than at any point in history, so we wouldn’t need any particular generosity from the Chinese.
Infrastructure spending right now is a win-win for America. We borrow at essentially a negative rate after inflation for stuff we desperately need anyway. That spending stimulates the economy (only the degree to which is debatable). Those investments save us money in the long run, making systems more efficient and preventing more costly repairs from major failures and natural disasters.