What Government Programs Promote Growth? The CBO Can’t Say.
Conn Carroll has a post at Beltway Confidential that should be required reading for all the Washington smart set today. He highlighted an exchange between Rep. Tim Huelskamp (R-KS) and Douglas Elmendorf, the Director of the Congressional Budget Office wherein Huelskamp asked Elmendorf to which federal government programs led to economic growth. Here was Elmendorf’s answer:
There are pieces of federal spending that have been important in economic growth. I don’t have an exhaustive list of that and we are not good at modeling those affects.
Huelskamp then asked Elmendorf to follow-up on the question and let him know, after he did have a chance ot build an exhaustive list, which federal government programs drove economic growth.
Well, he got the letter and the answer is…murky, at best. Elmendorf could not find any specific program that directly grew the economy, though he did find some kinds of programs that could create conditions by which people would be in better positions to make our economy bigger and better. Here are a few of Elmendorf’s examples:
Some types of spending, such as funding for improvements to roads and highways, may add to the economy’s potential output in much the same way that private capital investment does. Other policies, such as funding for grants to increase access to college education, may raise long-term productivity by enhancing people’s skills.
Now, to be fair to Elmendorf, the CBO is not in the best position to do what Huelskamp asked. It’s particular mission is to take the information it’s been given and provide an answer based only on the information given. That is how the CBO was able to conclude that Obamacare would reduce the deficit; it had to double-count $500 billion the Democrats took from Medicare and applied both to deficit-reduction and cost reduction in two different places.
That said, the CBO has a better view of what the federal government can and can’t do for the economy than most government agencies. If Elmendorf can’t readily identify, even after a little time to search, what government programs directly grow the economy, you can be certain those programs don’t exist. Which is pretty much what any conservative already knows.