Deficits and investment: part 2

Yesterday, I discussed my concerns over the deficit reduction plan of the National Commission on Fiscal Responsibility and Reform. I should have noted that this is but one of a number of plans that have come out. And yesterday yet another plan was announced: Investing in America’s Economy: A Budget Blueprint for Economic Recovery and Fiscal Responsibility. Put together by DEMOS, the Economic Policy Institute and The Century Foundation, this plan has a distinctively leftward orientation.
I’m not enamored with everything in this budget. For example, I think the call for no spending cuts until the unemployment rate reaches 6% is a formula for simply putting off needed cuts.
However, the reports focus on investment — especially the return on public investment — is a welcome addition to the debate. Their Appendix G summarizes the case very well. My only argument is that it stops with traditional investments in education, infrastructure and R&D. We need a broader look at investment in knowledge and intangibles creation — and at the role of the public sector in making and fostering those investments.

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