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PPI Kicks Off 2020 Economic Debate With Iowa Fiscal Forum
Former Gov. Tom Vilsack, Former Lt. Gov. Patty Judge, & Iowa Rep. Chris Hall Headlined
DES MOINES – A public forum sponsored by the Progressive Policy Institute (PPI) today kicked off the 2020 presidential debate over fiscal issues in the nation’s first caucus state. The event featured Former U.S. Secretary of Agriculture and Iowa Governor Tom Vilsack; Former Iowa Lieutenant Governor Patty Judge; Iowa Rep. Chris Hall, Ranking Member on the House Appropriations Committee; and Director of PPI’s Center for Funding America’s Future, Ben Ritz. PPI President Will Marshall moderated the panel discussion.
There, PPI released a new report authored by Ritz about the role that public investment plays in providing the foundation for a prosperous economy, as well as the steps that must be taken to end America’s current public investment drought.
“Federal spending on public investments in education, infrastructure, and scientific research is now near record-low levels as a percent of GDP,” said Ritz. “Meanwhile, the cost of interest on our growing national debt is skyrocketing thanks to fiscally irresponsible tax cuts and the unchecked growth of federal health and retirement programs. By 2026, annual interest costs will be more than the twice the size of all public investment spending combined if current policies remain in place.”
This year, for the first time in modern history, China – not the United States – will be the global leader in R&D spending, jeopardizing America’s position as the global leader in innovation. Failure to reverse America’s disinvestment in infrastructure could reduce GDP by nearly $4 trillion over the next decade, costing the average family about $3,400 per year. And growing problems with our nation’s education system are denying American workers the skills they need to compete for next-generation jobs.
A major cause of this public investment drought is irresponsible policymaking in Washington, according to the report. President Trump and the Republican-controlled Congress abandoned any pretense of fiscal responsibility and starved public investments of much-needed revenue by adding more than $2 trillion of reckless tax cut to the national debt over the past year. Further, the aging of the population and rising health care costs is causing projected spending on federal health and retirement programs to grow from about 10 percent of GDP today to nearly 16 percent of GDP in 2048. The refusal of both parties to modernize these programs has left fewer resources available for federal public investment.
State and local governments are also suffering from similar problems that constrain their own abilities to fund public investments. Republican governors and legislators in states such as Kansas and Oklahoma enacted unaffordable tax cuts that resulted in dramatic cuts to public investment. State and local budgets are also strained by demographic changes: as a share of GDP, state spending on Medicaid has increased nearly 40 percent since 2000 due to rising health costs, while the costs of unfunded pension liabilities have doubled during the same period as the bill for retiring baby boomers comes due. The result: a perfect storm of fiscal mismanagement has drained public investment spending at all levels of government.
Fortunately, there are signs that the American people appreciate the stakes and need for change: the report notes that large majorities of voters in both parties have expressed strong support for government spending on public investments in several independent polls. Additionally, a poll conducted by PPI on the eve of the 2018 midterm elections found that more respondents (85 percent) were very or somewhat worried about the growing federal budget deficit than any other issue polled – including almost 9 out of 10 independent voters.
These findings suggest that Democrats serving in the 116th Congress, and running for President in 2020, have a unique opportunity to draw a stark contrast between themselves and fiscally irresponsible Republicans by offering the electorate an agenda that pairs robust public investment in progressive priorities with the fiscal discipline necessary to secure those investments for generations to come.