Indie Economics

The unexpected budget lines

David Brancaccio Nov 3, 2014
To mark the turn of this millennium, developers in Britain once spent something close to $1 billion to create a huge dome outside London. When the dome’s business model crumbled, about $160 million in government money had to be put into the bubble-shaped venue to keep it solvent. That is a lot of money to spend on infrastructure for a New Year’s Eve party, and many Britons thought it was a boondoggle. 
 
That said, at least it was money spent for something that was supposed to be fun.
 
The federal government in the U.S. is about to spend extra money next year, but the word “fun” has absolutely nothing to do with it. Experts say the federal budget is likely to be punctuated with new, previously unexpected spending to stop the terrible Ebola virus.
 
With these mid-term elections, the expectation is that Republicans will emerge with more sway in Congress. Following conservative principles, this might suggest that that government budgets would be in for some new trimming. 
 
The threat of Ebola could push things the other way. Stan Collender watches the federal budget with the practiced eye that some handicappers train on horses. Collender is now a senior VP at Qorvis MSLGroup, but in another life he was a staffer on both the House and Senate budget committees.
 
He points out that after cuts in recent years for public health programs – including new vaccines for infectious diseases – the National Institutes of Health will get more money. So will the Centers for Disease Control. But it won’t stop there. “Transportation, Homeland Security, Education, Health and Human Services are all going to find some way of being involved in the Ebola fight,” Collender said. And don’t forget the Department of Defense, which has already deployed soldiers in West Africa to help fight the disease closer to the outbreak. “I expect there will be pockets of Ebola money all over the domestic side of the budget just to deal with it in every way possible.”
 
In a perverse way, this extra spending could produce a boost to the U.S. economy. First, there is the new spending itself. Gross Domestic Product counts money that changes hands and money will change hands, from taxpayer to the anti-Ebola fight. And if the spending actually works, there will also be an incalculable multiplier effect. Imagine the human and economic benefits if these augmented government programs keep people from getting sick.
 
It pains me to have to type the word “if” in the middle of that sentence.

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