New CBO Study Summarizes Federal “Investment” Spending

Today, the nonpartisan Congressional Budget Office issued a new report entitled Federal Investment, 1962 to 2018.

To some extent, the CBO study just repeats, in much greater detail, the points and numbers made in the ETW article of two weeks ago, Perspective: Infrastructure and “Investment” Spending in the Big Budget Picture. (I swear I had no idea that CBO was working on this.) Both the ETW article and the CBO paper largely rely on concepts and numbers reported by OMB in the FY 2020 budget and are largely identical. (Education spending is part of investment, and CBO and OMB use differing concepts of how to classify Pell Grants, which accounts for the difference in the totals.)

But the CBO study also adds investment spending data for state and local governments, which ETW did not have. In particular, the CBO study shows the relative changes in spending on “non-defense public physical capital” of which all of what we think of as government spending on “infrastructure” pretty obviously has to be a subset, no matter how you precisely define “infrastructure.”

First, federal nondefense physical capital spending in 2018 by budget function, split further between direct federal spending versus federal grants to state and local governments:

Second, total federal-state-local spending in FY 2017 on transportation by road, air, rail, or mass transit, both in billions of 2018 dollars and as a percentage of gross domestic product.

And, finally, combined federal-state-local spending on water resource and supply infrastructure in FY 2017, both in 2018 inflation-adjusted dollars and as a share of GDP:

(That last one bears some explanation. The federal government got into making Clean Water Act grants in a huge way starting in 1972, and the backlash to that tremendous spending increase, via contract authority, was what it took to get the Appropriations Committees on board to support what became the Budget Act of 1974. Starting in the mid-1980s, the federal government stopped making grants under the Clean Water Act and Safe Drinking Water Act, for the most part, and instead replaced those grants with loans via federal capitalization of state revolving funds, which in turn make ultra-low-interest loans to municipalities for water systems and treatment plants. The face value of loans does not show up in the federal budget and is thus not reflected in those numbers. So the real federal share of the combined federal-state-local total would be significantly higher if you counted the face value of the federal loans as federal.)

And, as always, one of the great things about CBO studies is that they let you download the Excel spreadsheet with all the raw data used to make the great charts and graphs…

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