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The pace of public investment

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Snapshot for September 22, 1999

The pace of public investment

There is no denying that both the Republican Congress and the Democratic White House have put forth budgets that will continue the trend in reduced public investment. The chart compares the inflation-adjusted rates of Gross Domestic Product (GDP) growth to federal spending in public investment areas such as physical capital, research and development, and education and training programs. GDP is useful as a basic benchmark for determining spending levels on public investment. For over 20 years GDP has been growing more rapidly than spending in any category of public investment.

The rates in the chart are average annual compound rates from 1992 to 2000. The 1992 levels reflect the last year of the Bush Administration; the 2000 levels are those proposed in the Clinton Administration budget. Although the federal government has consistently been accused of spending excesses, in terms of public investment, the Clinton Administration proposes less spending in 2000, relative to GDP, than was enacted in the final year of the Bush Administration.

Looking to the years after 2000, the trend toward slow growth in public investment spending will likely worsen as discretionary spending for federal programs is reduced even further by the proposed Clinton budget.

Figure 1

Source: Office of Management and Budget Data, Mid-Session Review.

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