How Federal Investment in Highways, Science and Schools Has Changed in 50 Years

The government’s investment in physical capital, research and development, and education and training totaled $531 billion in fiscal 2012 -- about 15 percent of federal spending and 3 percent of gross domestic product, the Congressional Budget Office calculated in a new report.

The extent of such long-term investment in highways, science and schools measured against the overall economy has been “roughly stable over the last 20 years,” CBO analysts wrote. But it is about half the government's discretionary spending levels in the 1960s, when such spending took up more than 30 percent of the annual appropriations budget and 6 percent of GDP.

CBO laid out the benefits of such long-term government spending, but, as it does frequently, cautioned lawmakers about the uncertainty of its analysis.

“Most federal investment for nondefense purposes contributes to the economy on an ongoing basis by improving the private sector’s ability to invent, produce, and distribute goods and services,” the nonpartisan arm of Congress wrote. “Defense investment contributes to the production of weapon systems and other defense goods, but much of it is sufficiently separate from domestic economic activity that it does not typically contribute to future private-sector output; the exception is the small portion of defense investment that goes to basic and applied research.”

As an example, CBO said, without public highways, the trucking industry’s costs for moving goods would be much higher. “The result of that higher productivity is higher private-sector returns. However, the size and nature of those returns are subject to considerable uncertainty, and some of the factors that contribute to that uncertainty are important considerations for policymakers facing decisions about how -- and how much -- the federal government should invest.”

(Image via Mihai Andritoiu / Shutterstock.com)