Thursday, December 19, 2013


[IWS] CBO: FEDERAL INVESTMENT [18 December 2013]

IWS Documented News Service


Institute for Workplace Studies----------------- Professor Samuel B. Bacharach

School of Industrial & Labor Relations-------- Director, Institute for Workplace Studies

Cornell University

16 East 34th Street, 4th floor---------------------- Stuart Basefsky

New York, NY 10016 -------------------------------Director, IWS News Bureau



Congressional Budget Office (CBO)


FEDERAL INVESTMENT [18 December 2013]


[full-text, 36 pages]



What Does the Federal Government Invest In?


Observers define investment in different ways. In the view of CBO, there are three broad areas in which the federal government invests:


·         Physical capital includes structures, such as government buildings, transportation infrastructure, and water and power projects; major equipment, such as computers, machinery, and vehicles; and software. For spending on physical capital to qualify as investment, the physical capital must have an estimated useful life of at least two years. Most federal investment in physical capital for defense purposes is for purchases of major equipment, such as ships and aircraft. Investment in physical capital for nondefense purposes, by contrast, is dominated by transportation spending, which provides infrastructure that contributes to the functioning of the economy.


·         Research and development has three components: basic research, which seeks to discover scientific principles; applied research, which attempts to translate those discoveries into more practical matters; and the development of new products and technology. Federal R&D spending supports a wide variety of work in government laboratories, universities, and the private sector, including health research studies, basic research in physics and chemistry, and the development of weapon systems. R&D investment builds the stock of knowledge that helps expand the economy over time, and the academic research that it funds is essential to the training of future generations of scientists. Most of the R&D spending by the federal government that supports defense is focused on development, rather than on basic or applied research.


·         Education and training includes early childhood, elementary, secondary, and postsecondary education, which help produce a skilled, capable workforce that contributes to the country’s productivity. It also includes job training and vocational training for veterans and others, which likewise promote a productive workforce. Federal spending on education and training is thus an investment in the nation’s human capital.




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