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[Tyrone Slothrop]

Originally Posted by sebastian_dangerfield

This comment:

"In sum, on the benefits side of the equation: more jobs now, $500 billion of additional consumption of goods and services over the next two years, and then a $40 billion a year flow of higher incomes and production each year thereafter."

Sounds intentionally vague to me. Once the infrastructure is built, the gains from it will fade. It is a one shot deal - not unlike our original stimulus. We're not going to see that $40bil year in year out indefinitely, which is why Summers avoids offering any projection on its sunset (NPI).

It's not vague at all. He says it's $40 billion/year in higher incomes and production each year thereafter. Three sentences later, through the magic of lawyerly rhetoric, you change this to $0 billion/year thereafter. Nicely done!

eta: You've cut the two prior paragraphs, where Delong explains where the $40 billion comes from:

the $500 billion of extra federal infrastructure spending over the next two years would produce $1 trillion of extra output of goods and services, generate approximately seven million person-years of extra employment, and push down the unemployment rate by two percentage points in each of those years. And, with tighter labor-force attachment on the part of those who have jobs, the unemployment rate thereafter would likely be about 0.1 percentage points lower in the indefinite future.

The impressive gains don’t stop there. Better infrastructure would mean an extra $20 billion a year of income and social welfare. A lower unemployment rate into the future would mean another $20 billion a year in higher production. And half of the extra $1 trillion of goods and services would show up as consumption goods and services for American households.

In sum, on the benefits side of the equation: more jobs now, $500 billion of additional consumption of goods and services over the next two years, and then a $40 billion a year flow of higher incomes and production each year thereafter. So, what are the likely costs of an extra $500 billion in infrastructure spending over the next two years?

I think you're being chary. We all get that if private industry -- say, Chinese middle-class investors, suddenly empowered to invest in the US -- were to spend $500 billion in infrastructure, it would create jobs, which lead to more income here. The same is true if the government makes that investment.