Rep. Kucinich did not appear before the Commission. This is a summary of the written statement he submitted to the Commission.
Written Testimony: Rep. Kucinich stresses the need for more and better information on the costs and benefits of public investment. He commends to the Commission, "Public Investment for a 21st Century Economy," a section of Restoring Broadly Shared Prosperity (Economic Policy Institute, 1997) by Jeff Faux. He recognizes the historical significance of projected Federal budget surpluses and the opportunity to take a fresh look at our Federal budget process and investment policies.
Rep. Kucinich divides his discussion of capital budgeting into two parts: the function of analysis and reporting, and the formal institution of a capital account in the Federal budget. On the first point, he mentions efforts by the General Accounting Office, the Office of Management and Budget, and the Bureau of Economic Analysis to provide information on publicly owned assets. On the second point, there is a need for more specific, less aggregate level of analysis, particularly with regard to costs and benefits of public projects, including expenditures, regulations, and tax expenditures. There should be a thorough review of how Federal cost-benefit analysis is performed with respect to its methodological soundness and ideological neutrality.
Rep. Kucinich also acknowledges the pitfalls involved in developing a capital budget and urges any movement to establish such a budget to proceed cautiously. He pointed to five concerns that should be taken into account. First, there are certain investments that are public capital in some sense, such as the skill level of the workforce, but are difficult to quantify in economic terms. Failing to include these "intangible" investments would result in an incomplete capital budget and a bias towards those functions that are more amenable to measurement.
Second, a capital budget could bias decisions towards investment and away from consumption. Ill-advised infrastructure spending should not displace crucial nutrition and health care programs.
Third, the level of capital spending should have no automatic consequences for allowable deficits. Net investment levels should ideally approximate the level of borrowing, but not constrain it.
Fourth, trust funds with earmarked revenues should not be considered separate capital budgets. There is no necessary relationship between revenues to these funds and their investment spending.
Finally, it should be noted that capital budgeting will not necessarily
result in additional capital investment spending. Congress and the President
would likely set practical limits on the amount of such spending.
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