All Washington talks about lately is how to reduce the deficit, and indeed that "should be a key priority," Larry Summers writes in the Washington Post. But it's not everything. "Budget deficit obsession in conjunction with rigid bureaucratic scoring rules may preclude high-return investment" we desperately need, the former Obama adviser warns. Just as CEOs eying their quarterly results "can take perverse steps that are ultimately harmful to shareholders" to goose the numbers, many deficit-reduction plans are short-term, and ultimately harmful, Band-aids.
The US has other deficits, too, Summers warns. "No one who travels abroad from the United States can doubt that this country has an enormous infrastructure deficit." Fixing that could have stimulus benefits, and it would cost little given our near-zero borrowing rates. And that's just the most glaring. We're also facing big growth and job deficits, which will have a much more profound impact on the economy we leave our kids. "By all means, let's address the budget deficit. But let's not obsess over it." Click for Summers' full column.