Thursday, January 24, 2013

Let's Shoot Ourselves In the Foot; Investment Edition

The following two graphs are from Mike Konzcal over at the Next New Deal (see links here and here) and they highlight a terrifying trend in the US:

First, notice that the amount of money spent on public education has been declining since the recession.  Second,

We are also seeing a large decline in the number of teachers who are actually teaching.

So, we're seeing a sharp decrease in educational spending at the national level, while the teachers who have been fired are not being replaced by the private market.  That means we'll be seeing things like increased class size -- a terrible idea for educating children -- increased stress on teachers and in general a very bad situation overall.

I can speak to this from the experience of my state, Texas.  We have a biennial legislative session that lasts a few months.  In the last session, the state cut $5.4 billion from the education budget.  While the educational system was very vocal about this this, it passed through the legislature because it's extremely conservative.  In the latest budget proposals, we're seeing a projected surplus but there has been no talk about making up the deficit in financing even though the population of the state has increased since then.   The following summation is from the El Paso Times:

Texas lawmakers -- primarily Republicans -- two years ago passed a $173.5 billion budget that cut spending and services and did not fully fund inflation or population growth. The budget sliced $5.4 billion from public education and put off nearly $5 billion in Medicaid costs. Only one member of El Paso's delegation in Austin, then-Republican state Rep. Dee Margo, voted for the budget two years ago.

The proposed 2014-15 House budget uses about $187.7 billion in state and federal funds, which is $2.2 billion less than the current budget. The Senate version is about $186.8 billion, or $3.1 billion less than the current budget.

But while the proposed budgets would use $2.2 billion to pay for the projected enrollment growth of 85,000 students in the state in 2014-15, neither would include money for the enrollment growth that was not fully funded in the last budget cycle. The proposed budgets also do not restore the $5.4 billion in budget cuts to public education that the Legislature approved last session. 

We're seeing the same problem at the national level with infrastructure spending.  As I've noted ad nauseum, the US' infrastructure is in terrible shape and needs a massive amount of investment to bring it up to speed. Yet, we continue to implement stop gap measures that only put a band-aid over the problem.

The basic  problem is that investment in education and infrastructure is neither politically sexy nor are the benefits immediately apparent.  However, by not making these investments now, we are shooting ourselves in the foot regarding long-term economic growth.