Latest / The Fiscal Policy Podcast with Fexingo: Government Budgets, Stimulus, and Public Spending
How the Government's Discount Rate Shapes Trillion-Dollar Decisions
The federal government uses a discount rate to evaluate the long-term costs and benefits of public projects. But a single percentage point change in that number can flip a project from cost-ineffective to a no-brainer. Hosts Lucas and Luna dive into the recent 2025 update to OMB Circular A-94, which lowered the real discount rate from 2.5% to 1.5%. They explore the real-world consequences for infrastructure, environmental regulations, and healthcare investments, citing specific examples like flood protection projects and energy efficiency standards. Plus, they examine the economic theory…
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