Changes to Budget Necessary to Increase Public Investment, Spur Economic Growth

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By March 27, 2014

If the federal spending cuts known as sequestration stay in effect, they will lead to a historical low level of public investment—hindering a full economic recovery. Congress should set smarter priorities regarding discretionary spending to spur a full economic recovery and fund necessary public investments.

One path to smarter spending priorities is to cut Pentagon spending and use the savings to fund public investments. Currently, the United States’ defense budget is larger than that of the 10 countries with the next highest military budgets combined. With the Department of Defense proposing to reduce the Army to its smallest force since World War II, cutting Pentagon spending is both necessary and desirable. Conversely, non-defense discretionary spending that can be categorized as “investment”—programs that put people to work now but also benefit the economy for decades to come, such as physical infrastructure, education, and workforce development—must be expanded in order to spur economic expansion, increase job creation, and enhance economic opportunity for all.

The Congressional Progressive Caucus’ (CPC) “Better Off Budget” proposes both to increase the amount of discretionary spending in the federal budget, and to make non-defense discretionary spending a higher priority. Compared to the current spending trajectory, in 2024—the final year of the current “budget window”—under the CPC fiscal year 2015 budget proposal, the discretionary budget would be $127 billion higher. This figure incorporates both $104 billion less for Pentagon spending and $231 billion more for non-defense spending, with increases going toward budget functions that advance our national goals of expanding the economy and creating more broadly shared prosperity—education, income security, transportation and scientific research.

EPI Snapshot

CPC Budget Would Increase Discretionary Spending, Boost Investment: Projected fiscal year 2024 discretionary budget authority (billions of dollars)

National Defense Education, training, employment, and social services Income security Veterans benefits and services Health Administration of justice International affairs Natural resources and environment Transportation General science, space, and technology Other
Current Law 742 112 81 86 71 71 64 46 40 36 12
CPC Budget 637 149 123 112 95 87 80 59 44 49 49

Source: Economic Policy Institute Policy Center analysis of Congressional Budget Office and Office of Management and Budget data.

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