Budget Categories

While I was working out this morning, I was watching the supercommittee hearings on CSPAN (pretty lame, huh). And Doug Elmendorf was explaining all the categories that the committee had to be conscious of…discretionary vs nondiscretionary,  defense vs nondefense, security vs nonsecurity.

And it struck me that we were missing the most important budget categories: investment vs consumption.  Yes, I know that this is an age-old debate, whether the federal government needs a capital budget. But it would really clarify a lot of the debate.

The investment budget would of course include physical capital such as infrastructure; human capital such as education and training; and knowledge capital such as R&D.

 

I think that the main thing that the committee should do is protect the federal investment budget. We don’t want federal investment going back to the low levels of the 1980s and 1990s.
 

R&D in the Budget: Half Full or Half Empty?

The President’s budget calls for flat spending on R&D, adjusted for inflation.

 

Is this good news or bad news? Depends on what your expectations are.  The general reaction was favorable.

Science News wrote:

President Obama sent the research community a valentine of sorts in his proposed 2012 federal budget. Sent to Congress on February 14, the budget was a pledge to fight for increased investment in research and education even as the president committed to a belt-tightening for most segments of federal spending.

Mark Muro and Kenan Fikri at the New Republic wrote:

In sum, whether slightly surreal or not, given the uncertainty of the present environment, it is important and appropriate that the White House has put down a strong marker for investment and growth through innovation even though the 2012 budget dialogue will be focused on cost cutting.

Personally, I’ve got a wait-and-see attitude. I worry that the White House is still in a pro-regulatory mood that will encumber innovation.

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