Government spending refers to the money and resources that the government uses to cater for basic but essential national goods and services. Ideally, government spending can either be investment or consumption oriented. They include defense, education, health and infrastructure among other services. In the United States, there has been a gradual development in the rate at which government spending has been carried out since1960 (Siu par 8). First, education has taken a rising pace through which government spends to facilitate the development of education. Ideally, the proportion of the GDP was rated to be apportioned by 0.20% that has developed to a probable 5.7% before 2015. The graph below indicates the gradual improvement. Ideally, the increase in the level of government expenditure has resulted from the increased household consumption.
Different public allocations account for the cumulative budgetary increment. Health is also an essential sector of public fund allocation. In the 1960s, it was rated to accommodate 0.25 of the GDP (Siu par 12). Current trends indicate that approximately 7% is being allocated to the docket. The graph below illustrates the trend of government spending. Statistically, since the 1960s investment spending and consumption spending has tripled. This means that there are multiple investments today. For instance, in the year, 2013 some of the obligatory government spending towards social services such as security and Medicare were allocated substantial funds to enable them to ensure that the public received quality services. For instance, the funds allocated to Nutritional departments in the year 2011 were approximately $96 million. There is a substantial proportional growth of the funds invested and consumed in the current times when comparing it with the previous years.
For the government to run its programs, it sometimes relies on borrowing. Ideally, the government of the United States has been allocating more funds with the intention of providing essential services in a non-profit making process. Therefore, this affects the real national burden leading to the government of the United States to correct higher rates of taxes among other fees. However, for the government to minimize the future burden of debt it should apply the discretionary contractionary fiscal policies. They are meant to minimize the level of public deficit at the current financial year. They help the United States, among other countries, to solve the crowding of effects of the deficit balances.
Conclusively, government spending is identified as consumption when its main objective is to fulfill the government’s role of providing merit goods for no profit. However, government expenditure that is investment-oriented is expected to provide essential merit goods. In addition, it is deemed to have the desire to optimize its printable earnings. Ideally, the government may opt to do so if it intends to create a state of balance in the investment arena to protect the public from monopoly oppression. In addition, it does so with the intention of supplementing the projects funded out of borrowings.
Works Cited
Siu, Henry E. "Optimal fiscal and monetary policy with sticky prices." Journal of Monetary Economics (2004): n. pag. Print.
