Thursday, March 7, 2013

Public Support for Education in Real Terms

Travis Waldron is rightfully worried about the cost of a college education and the diminishing support from the government:
Only 12 states now spend more on higher education than they did before the recession. The decrease in funding has contributed to the six-fold increase in college tuition over the last 30 years.
A six-fold increase? Let’s be fair – consumer prices today are about 2.5 times what they were 30 years ago – so in real terms, college tuition is up by a factor of 2.5 or so. But OK – this is a staggering increase. Mark Thoma highlighted this as well and is getting some comments doubting that government support for education has declined. This table labeled “Table 3.15.6. Real Government Consumption Expenditures and Gross Investment by Function, Chained Dollars” shows that in real terms (2005$), total government spending on education was $690 billion in 2009 but was only $648 billion in 2011. I know that the austerity freaks in the Republican Party want to claim reducing government spending is good for growth but they are wrong on two fronts. Any fiscal restraint now prolongs this Great Recession. And this kind of austerity impairs the creation of human capital needed for long-term growth. It is not just the cutbacks in higher education that concern me but the general tendency for state and local governments to layoff teachers in order to balance their budgets.

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