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OpEdNews Op Eds    H2'ed 3/17/21

The Biggest Deficit You've Never Heard Of

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From Robbert Reich Blog

America has a deficit problem. But the country's biggest deficit isn't the federal budget deficit. It's the deficit in public investment.

The public investment deficit is the gap between what we should be investing in our future on infrastructure, education, and basic research and the relatively little we are investing.

Increasing public investment needs to be a major goal of the Biden administration.

Public investment is similar to private investment in that we invest today because of the payoff in the future. The difference is public investment pays off for all of us, for America.

In the 1960s, we used to make a lot of public investments. But they've been steadily declining ever since.

That decline has been largely driven by so-called "deficit hawks" who argue against more federal spending. But as I've been saying for years, reducing the federal deficit just for the sake of reducing it makes no sense.

Any business person knows that you borrow money for the sake of investing in the future of your business. Those are wise borrowings. Because then you can pay those debts off when they get bigger.

A national economy works exactly the same way. It doesn't matter that we're borrowing money, if we're investing those monies that we borrowed from abroad in education, training, infrastructure, factories but we're not.

The public return on infrastructure investment, based on 2020 report taking into account the pandemic, averages $2.70 for every single public dollar invested yet we haven't made those investments. Our infrastructure today is crumbling.

The return on early childhood education is between 10 and 16 percent but only a handful of our children have access to early childhood education.

Public investment on clean energy has an annual return of over 27 percent. But federal tax breaks favor fossil fuels over renewables by about 7 to 1.

The public return on investments in basic research and development are huge. America's competitiveness depends on them, because no individual company has an incentive to make them. The lithium-ion battery that powers iPhones and electric cars was developed by federally sponsored materials science research, while the Internet itself was borne out of the Advanced Research Projects Administration.

And yet in recent years, public investment in basic research has declined as well.

Are you seeing a pattern yet? Federal investments in all these areas have shrunk even though the payoffs from these investments are gigantic, and the costs of not making them are astronomical. American productivity is already suffering.

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Robert Reich, former U.S. Secretary of Labor and Professor of Public Policy at the University of California at Berkeley, has a new film, "Inequality for All," to be released September 27. He blogs at www.robertreich.org.

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