Government Expenditure essay
Today, the problem of the high government spending raises the debate over the possible reduction of the government spending that will stimulate the economic growth of the US. However, the government spending tends to increase rather than decrease and this trend is likely to persist. In such a situation, it is important to understand the main items comprising the core of the government spending today.
The government expenditure is the subject to the public debate because the government spending is one of the primary concerns in the time of the economic downturn, while cuts in the government spending affect a large part of the population. At the same time, in spite of economic problems and policies conducted by the government, the government spending tends to increase in the US. At this point, it is possible to refer to the article “What Is Driving Growth in Government Spending?” by Nate Silver, where the author explores the historical change of the government spending and reveals major trends in the government spending and how it affects the US economy and society.
In fact, the author of the article provides the detailed analysis of the development of the government spending and stresses key changes that occur in this field in the US. In this regard, it is worth mentioning key findings of the author. First, the government spending on the defense comprised over 40% as share of GDP and comprised the lion share of the total government spending not only during World War II but also after the war.
However, in the course of time, the government spending has shifted toward the higher spending on social welfare programs and entitlement programs. The author places emphasis on the fact the government spending on the entitlement programs comprised the larger part of the total government spending by 2010. At the same time, the author points out that the government debt and interests on the national debt remain low. At first glance, such a trend is paradoxical, because the national debt keeps growing but the author explains the low costs of interests on the national debt for the federal budget by the fact that borrowed money and interest rates are cheap borrowings. Therefore, it is possible to trace three major trends: 1) the cut of spending on defense; 2) the growth of the government spending on entitlement programs; 3) the low costs of interest rates that makes the public debt a cheap instrument to cover the budget deficit.
Eventually, Silver arrives to the conclusion that the growing spending on entitlement programs may become too costly for the US government, while Americans will take the government spending on diverse social programs for granted. As a result, Silver compares the federal government to insurance brokers, who takes risks and covers health care and other costs of their clients, who do not even care about them.
However, some points made by Silver in the article are debatable/many researchers () disagree that the public debt is as attractive as Silver believes. In fact, the public debt is still the costly instrument because the government will have to serve the debt in a long run. As a result, the growth of the public debt will still increase the government spending on interest on the public debt. Many researchers () insist that if the public debt keeps growing, it will become the unbearable burden for the federal budget.
At the same time, I believe that the growth of spending on entitlement programs is a very important trend but it is not necessary as negative as Siler believes. To put it more precisely, the government spending on entitlement programs means the funding of health care programs, educational programs and other entitlement programs. If the government cuts abruptly costs spent on these programs, a large part of the population will be unable to cover those costs that may have disastrous effects putting many people on the edge of survival. Moreover, another effect of the possible cut of the government spending on entitlement programs will be the reduction of revenues of businesses and organizations that rely on the government funding. For example, health care organizations will have to cut their services provided for the population covered by welfare programs sponsored by the government. As a result, the cut of the government spending on entitlement programs may trigger the deterioration of the socioeconomic situation in the US and, more important provoke the large scale social conflict.
Thus, the government spending tends to increase today basically due to the growth of entitlement programs. Silver warns that this trend may have negative effects on the US economy and society in a long run. In this regard, the reduction of spending on defense and infrastructure remain almost unnoticed by the author, who considers that such reduction is not significant and disastrous. However, the conclusion of the author that the rise of the government spending on entitlement programs is negative is questionable because, otherwise, i.e. in case of cuts of the government spending on entitlement programs, the US may face the profound socioeconomic crisis.
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