This morning, the Administration released its proposed Budget of the United States Government. Regardless of the politics as to whether or not this particular version of the budget will be enacted or not, the document contains interesting information, including on investments by the federal government in intangibles. The documents released today do not contain a detailed or complete analysis of what we invest in intangibles assets. But it does contain a rudimentary analysis as part of the federal investment chapter (Chapter 6) of the Analytical Perspectives volume. The analysis includes investments in physical capital, R&D and education and training. Education and training expenditures include aid for higher education through student financial assistance, loan subsidies, the veterans’ GI bill, and health training programs, education programs for the disadvantaged and individuals with disabilities, training programs in the Department of Labor, and Head Start.
Last year, I used these figures to compute a rough estimate of investment in intangibles (see analysis of last year's budget submission). This rough estimate is derived by looking just at the R&D and education and training budgets. Federal government investments in intangibles peaking in 2006 in real terms. Real dollar investments in R&D and education and training grew slightly between 1968 and 2001 and then jumped dramatically. Estimated levels for 2008 and proposed levels for 2009 drop, mostly due to a sharp decline in investments in education and training, again in constant dollars.
Unfortunately, this analysis is very rudimentary and incomplete. It does not look at the education and training budget in any depth and does not include training done by the federal government for its own purposes. It does not include funding for the arts and humanities. Nor does it look at a number of other activities of the federal government that result in the production of intangibles, such as government statistics and other information services like the weather service or standards setting activities. And it doesn’t include any brand management activities, such as export promotion.
If we are to understand the I-Cubed Economy, we need a better understanding of the contribution of the federal budget to the creation and utilization of intangible assets.
Update: For the politics of the budget see
White House Budget Request Expects Near-Record Deficit - WSJ.com
The White House again called for lawmakers to scrap hundreds of government programs it deems ineffective. Getting rid of 151 programs would save more than $18 billion, according to the White House. It is unclear how many, if any, of those programs Congress would be willing to cut, however.
The White House's budget request is typically declared dead on arrival on Capitol Hill and less than a year before Mr. Bush leaves the Oval Office, lawmakers were quick to dismiss the administration's most recent effort.
"This budget will be quickly forgotten," said Senate Budget Committee Chairman Kent Conrad (D., N.D.). "But, unfortunately, the President's legacy of debt will stay with us, as it is passed on to future generations. His stewardship of our budget has been an utter disaster."
Senate Budget Committee ranking Republican Judd Gregg (R., N.H.) said the president's budget isn't "serious." While quick to point out that Democrats have done an equally poor job since taking control of Congress a year ago, Mr. Gregg didn't hesitate to criticize Mr. Bush. The plan relies upon revenue from the alternative minimum tax, makes unrealistic assumptions about discretionary spending, and fails to budget for military operations in Iraq and Afghanistan, Mr. Gregg said.
"Look at the defense numbers. They are absurd on their face," Mr. Gregg said.
Leave a comment