This essay considers how spending by the federal government can improve long-term living standards. The familiar concept of “capital budgeting” separates government expenditures into two categories: purchases of goods and services for current consumption that provide no long-term payoff (“operating expenditures”), and purchases of productive capital goods that do generate long-term payoffs (“capital expenditures”). Within that framework, I advocate expanding the range of possible public investments that would count as capital expenditures to include those that do not produce physical infrastructure but that nevertheless provide long-term economic benefits. Adding these items – such as spending on basic research, health care, nutrition, etc. – to the more narrowly-defined capital budget, I use the term “growth budgeting” to describe a system by which the government can identify a larger number of the available long-term investments that could benefit posterity. I then discuss the possible abuses of such a system and advocate the creation of a Growth Budgeting Board, which would apply a disciplined growth budgeting approach to possible public investments and advise Congress on the most promising spending programs.
- Public Investment,
- Economic Growth
Available at: http://works.bepress.com/neil_buchanan/2/