Rhetoric about public investment should always be subject to scrutiny. Genuine commitment to public investment—matched with proposed budgetary resources—is relatively rare, unlike cheap Beltway talk.
While many politicians and advocates on both sides of the aisle talk a good game, only progressives are meaningfully pushing to increase public investment.
Nevertheless, purported concern about public investment is often employed by centrists in the hopes of compelling progressives to acquiesce to social insurance cuts, where typical debt fear-mongering tactics fail to hold traction.
Centrists for Cuts
Cue Jon Cowan and Jim Kessler of the centrist Third Way think tank, who have already taken a much-deserved shellacking for their Wall Street Journal op-ed warning that populist liberalism will be the undoing of the Democratic Party, in particular the authors’ swing at Sen. Elizabeth Warren (D-MA) for advocating to expand Social Security.
By invoking the public investment red herring, Cowan and Kessler warn that social insurance spending is crowding out public investment and assert progressives are to fault for this imbalance due to a refusal to cut.
Concern about adequate public investment is absolutely deserved. But if this concern is genuine, Washington’s centrists should look in the mirror: self-professed deficit hawks are advocating for many things progressives are not, but adequate long-term public investment is not one of them.
Unless the government drastically reneges on longstanding commitments to provide health insurance to seniors (where market failures precluded private coverage), social insurance spending is bound to rise as the baby boomers retire.
Even if public investment was held constant, the ratio of federal spending on social insurance to public investment should be rising. This poses an existential crisis for conservatives sworn to anti-tax dogma and is distasteful to centrists either sympathetic to wrongheaded supply-side nonsense or lazily committed to squaring the difference between political parties.
The Progressive Proposal
Progressives alone embrace the obvious remedy: If government expenditures must rise, increase your budget constraint, considerably if need be.
Progressive budget proposals tend to markedly increase tax revenue to finance both standing social insurance commitments and increased public investment. Progressives are also willing to pay for their policy priorities in a transparent fashion, unlike the conservative fantasy that trillions of dollars of detailed tax cuts will be paid for with trillions of dollars of unspecified spending cuts.
Federal public investment is on a clear downward trajectory, thanks to the 2011 debt ceiling deal. The 112th Congress enacted roughly $3.6 trillion of deficit reduction over a decade, roughly 80 percent of which came from spending cuts.
The greatest relative cuts came from the non-security discretionary (NSD) budget, over half of which is classified as public investment, and which comprises about 90 percent of all non-defense federal public investment.
Blueprints for Growth
As detailed in a recent report by Josh Bivens of the Economic Policy Institute, the Obama administration, House Republican, and Senate Democrat budget proposals for fiscal 2014 all predicted federal non-defense public investment falling, within a decade, to the lowest relative levels since 1947.
The major outlier is the fiscal year 2014 budget alternative of the Congressional Progressive Caucus (CPC)—the most comprehensive progressive budget blueprint on the Hill.
The CPC budget proposed repealing all non-defense discretionary spending cuts from the 2011 debt ceiling deal (roughly $670 billion over a decade) as well as increasing non-defense discretionary spending by more than $1.5 trillion dollars and infrastructure investment by $1.1 trillion.
Or take Investing in America’s Economy, a progressive budget blueprint drafted by the Economic Policy Institute, The Century Foundation, and Demos. EPI’s latest adaptation proposed repealing non-defense cuts from the 2011 debt ceiling deal and financing an additional $2.5 trillion of public investments over a decade.
The only way to markedly increase public investment from an inadequate and falling trajectory is to raise a lot of revenue, and both of these budgets propose precisely that.
Alone in the Fight
Conversely, trying to increase the ratio of public investment to social insurance by simply cutting social insurance does not address the public investment shortfall—and it’s a deeply risky strategy, playing into conservatives’ attempt to finance trillions of dollars of regressive tax cuts with social insurance cuts. See the Ryan budget.
To my knowledge, no think tank or politician is seriously advocating deep cuts to social insurance programs in order to reshuffle $1 trillion or more toward public investment.
Centrist debt fear-mongering, on the other hand, contributed to the pivot toward the premature, unbalanced, and spending-cut-centric deficit reduction that has been enacted.
Roughly sticking to this ill-advised status quo, centrist think tanks as well as the Obama administration are either explicitly proposing or tacitly endorsing a falling trajectory of inadequate public investment.
If centrists want to use public investment as a credible wedge issue to bring progressives around to social insurance cuts, they must first propose financing public investment closer to historical averages.
But for the time being, only progressives are fighting for adequate public investment, period.