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New Ryan Budget Cuts Investments in America’s Future

New Ryan Budget Cuts Investments in America’s Future

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The new House Republican budget proposes steep cuts in both public and private investment.
The new House Republican budget proposes steep cuts in both public and private investment.

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Published by: Center for American Progress on Mar 13, 2013
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1Center or American Progress | New Ryan Budget Cuts Investments in America’s Future
New Ryan Budget Cuts Investmentsin America’s Future
House Republican Budget Proposes $1.2 Trillion in Cutsto Investment Critical for Economic Growth
Sarah Ayres and Adam Hersh March 13, 2013
 Yeserday Rep. Paul Ryan (R-WI) inroduced a budge proposal ha would slash $1.2rillion rom public invesmens in educaion, science, and inrasrucure ha are essen-ial o U.S. economic growh and compeiiveness.
1
Boh public and privae invesmensare criical componens o long-erm economic growh. Invesmen spurs job creaionand economic growh in he shor erm while boosing produciviy growh and livingsandards in he long erm. Public invesmen is crucial because many invesmens—while yielding large reurns o he counry as a whole—do no oer he kinds o incenives ha will enice he privae secor o inves. Wihou ha invesmen, we are all worse o. Onhe oher hand, when we as a counry make public invesmens in schools, roads, andscienic research, we all bene rom a more innovaive, more ecien economy.Ta is why he conservaive budge proposed yeserday by Rep. Ryan would hur oureconomy. I enaced, Rep. Ryan’s budge could pu he brakes on hree sraigh yearso job growh, during which he U.S. economy creaed a oal o 6 million new privae-secor jobs.
2
Moreover, our analysis shows ha he Ryan budge will rob Americanso uure economic opporuniies by slashing close o $1.2 rillion o invesmens ineducaion and skills raining, science and echnology research and developmen, andransporaion inrasrucure in he decade beween 2014 and 2023.Tis year’s proposed budge is jus as bad or invesmens as he $1.4 rillion in inves-men cus Rep. Ryan proposed in 2011 and he $871 billion he proposed in 2012.
3
 Economiss assess prospecs or economic growh by looking a how invesmen percapia grows over ime—he more capial goods, skills, and knowledge people have o work wih, he more producive and creaive hey can be. A a minimum, invesmenshould keep pace wih populaion growh and infaion and replace depreciaed pasinvesmens as hey wear ou rom normal use.
 
2Center or American Progress | New Ryan Budget Cuts Investments in America’s Future
Bu compared o 2010 unding levels—beore conservaive cus began o dismanlepublic invesmens—he analysis presened here shows how Rep. Ryan’s plan disinvessin America by cuting:Educaion and raining invesmen per capia by 47 percenransporaion inrasrucure invesmen per capia by 32 percenScience and echnology research and developmen invesmen per capia by 28 percenBy cuting he very invesmens ha make or a srong economy, Rep. Ryan’s budge isa plan or economic weakness. His proposed cus o invesmens will lead o slower jobcreaion, higher coss or businesses, and ewer Americans gaining he skills hey need oge good jobs. In his way, he plan pus a risk America’s abiliy o successully compeein he world economy.
Why investment matters for jobs and growth
Invesmen provides he oundaion or job creaion, economic growh, and a srong andprosperous middle class. Invesmens—in new scienic research, new acories, rans-poraion inrasrucure, and he educaion and healh o our workorce—conribue ogrowh by puting new echnologies o work, lowering coss or businesses, and increas-ing he produciviy and compeiiveness o American workers. A srong economy needs boh public and privae invesmens. Business invesmendrives he economy, bu public invesmen paves he pah on which business invesmendepends. Moreover, invesmens in educaion, inrasrucure, and scienic researchare imporan public goods. Public goods, similar o libraries and lighhouses, areinvesmens ha bene everyone bu ha he privae marke is unable or unwilling oprovide. We are all beter o—individually and as a sociey—rom having:Educaion invesmens ha boos produciviy and earnings o he workorceInrasrucure invesmens ha creae ecien and low-cos ransporaion andenergy sysemsResearch invesmens ha lead o echnological innovaions ha spawn counless new  business opporuniies and improve our qualiy o lieTese kinds o public invesmens can revoluionize he way we live our lives and con-duc business—jus hink o he inersae highway sysem, he Inerne, and medicalreamens or cancer and HIV/AIDS.Even beore he Grea Recession began in December 2007, invesmen in he U.S.economy was oo low. In he 2000s, under ormer Presiden George W. Bush’s policiesha direced ax cus a he wealhies Americans—and ax and regulaory cus a big
 
3Center or American Progress | New Ryan Budget Cuts Investments in America’s Future
corporaions—privae business invesmen experienced he slowes growh o any eco-nomic expansion in poswar U.S. hisory.
4
Te pace o invesmen in he U.S. economy ell rom 18 percen o gross domesic prod-uc, or GDP, in 2000—he oal value o goods and services produced by workers andequipmen in he Unied Saes—o 16 percen in 2007, he eve o he Grea Recession.
5
 Invesmen plunged o jus 11 percen o GDP in 2009, as he nancial crisis and he bursing housing bubble ook is oll—and beore he Recovery and Reinvesmen Aco 2009 helped reaccelerae invesmen o 13 percen o GDP in 2012.
6
 Amid alering U.S. invesmen under Presiden Bush’s ineecive policies in he 2000sand he poliical gridlock since hen, oher naions have raced ahead. China and India,or example, are making remarkable srides in educaional qualiy and atainmen,allowing hem o rapidly converge on advanced-economy counries such as he UniedSaes.
7
In 2007 China surpassed he Unied Saes in heir annual number o science,echnology, engineering and mahemaics, or SEM, graduaes. And by 2030 China willhave more college graduaes han he enire U.S. workorce.
8
 While our compeiors coninue o bolser heir public invesmens, American inra-srucure and educaion are crumbling or wan o resources, creaing real economiccoss or businesses and amilies. According o Naional Science Foundaion gures,ederal invesmens in research and developmen ell rom 1.1 percen o GDP in heearly 1990s o 0.8 percen o GDP in 2009, he las year or which daa are available.
9
Yet another conservative plan to disinvest in America
Rep. Ryans plan o disinves in he Unied Saes by $1.2 rillion could no be more illconceived. Insead o laying he oundaion or produciviy and economic opporuniy in he Unied Saes, he Ryan budge akes us in he wrong direcion—disinvesingin he American economy o give ax cus o he riches o he rich while allowing heoundaions or susained privae invesmen o crumble. We compare his House budge plan—or public invesmens in educaion and raining,ransporaion and inrasrucure, and science, space, and echnology—o merely main-aining unding or ederal public invesmen a he same level i was in 2010—beoreconservaive cus began undermining economic growh.
10
Te projeced consan-levelinvesmen gures are compared o he shrinking invesmen levels proposed by Rep.Ryan, adjused or infaion o 2013 dollars, and expressed in per capia erms.For he good o U.S. economic growh and prosperiy, invesmen would ideally go up, asis he case in many compeior counries. Bu even viewed agains he low bar o keepinginvesmen a he same 2010 levels, we can see jus how seeply he Ryan budge cus crii-cal invesmens. Te deails o he proposed cus are equally alarming.

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