ustxtxb_obs_1999_10_01_50_00019-00000_000.pdf

Aild American Income Life Insurance Company BERNARD RAPOPORT Chairman of the Board and Chief Executive Officer The way a debate is framed and choices are posed is often more important than which option is chosen. That’s because the framing of the debate sends a powerful message to the public about what’s at stake. It sets the boundaries of discourse. For politicians to stray beyond requires too much explaining and runs the risk of appearing irrelevant or radical. The debate over what to do with the Federal budget surplus offers a case in point. Congressional Republicans want to use almost all of it for a tax cut. President Clinton argues that it should be used to pay off present and future obligations. “Save Social Security. Save Medicare…. And get America out of debt for the first time since 1835,” he said recently in response to the Republican proposal. Both alternatives cutting taxes and paying off obligations – are attractive, if done equitably. Once the posturing is over, any final compromise is likely to feature some of each. But a third option to apply some of the surplus to public investments in our future is left out almost entirely. By public investments I mean things that will make the nation roductive in the future but that individuals or businesses ave little incentive to do on their own. Such public investments complement private investments. Without them, the private sector cannot sustain high returns over the long term. Politicians once talked about public investment. This was a central theme of the President’s 1992 campaign. Bill Clinton came to Washington stressing the urgency of dealing with “twin deficits” the budget deficit and America’s failure to invest adequately in our people. We are far better able to afford public investment today than in 1992, when the deficit loomed large. Yet we’re investing less, as a percentage of gross domestic product. Basic research and development, for example, is the foundation for applied research by the private sector. The Internet emerged from basic research financed by the Government, and similar efforts cry out to be made in fields like physics and environmental remedi ation. Yet basic research hasn’t kept up. In 1992, Federal invest ment in R&D was 0.43 percent of the gross domestic product. This year, it’s 0.39 percent. Likewise, an educated workforce is essential if we are to reap the benefits of new technologies. Companies have been investing considerable sums in computers and digital gadgets, but chief executives complain that they can’t find enough skilled people to use them. Yet the problem goes much deeper than a chronic shortage of software engineers. One out of six Americans is functionally illiterate. Our classrooms are overcrowded and understaffed, some literally falling apart. In 1992, Federal investment in education and train healt decades ow decades from now. Because the Federal budget fails to for tomorrow and spending on to by families and businesses in t public investment has been deba vored budget item from farm OM efits for the elderly is called all Government does is assumed to be sp vate investment. But many other nations have figured out how to draw the distinction. There’s a common-sense test. If it’s likely to make us more pro ductive in the future, it’s an investment. If not, it’s s Granted, there are hard cases. Spending on national environmental protection might be seen as investment tent they make the future more livable. Yet spendin is probably not. But hard cases should not distract us from the principled distinction. Private investment is critical, of course. The best argume cutting taxes and paying off financial obligations is that both free up money for the private sector, some of which will be invested. But the other portion will be consumed. And it is this distinction between investment and consumption –that should be the focus, rather than the distinction between private and public. Our future prosperity depends on the amount and wisdom of our private and public investments and on the restraint we show in our private and public consumption. Therein lies our real choice. Robert B. Reich, former Secretary of Labor, is a professor of social and economic policy at Brandeis University and national editor of The American Prospect. This article first appeared in The New York Times on August 11. THE TEXAS OBSERVER 19 OCTOBER 1, 1999