Good Example Of Essay On Entitlement Spending In Historical Perspective

Government Spending

Government spending is among the best ways of ensuring a balance in the economy. When the economic status of a country needs to be improved, the government spending is an appropriate measure to ensure economic prosperity. Improving the well-being o he citizens is a primary goal of the government, and this may be done in various ways. One of them is through entitlement spending where the government relieves the citizens of some expenses such as medical and social security. Another way through which the government may enhance the economic growth and development is through spending on infrastructures such as bridges, roads, and buildings. A reduction in government spending during recession implies a slow economic growth. However, investing a lot of national income on entitlements may slow the rate at which an economy grows. The composition of government spending on entitlements has had a significant shift since the 1960s. The spending on public investments was more than that on entitlements by two and a half. Currently, the government spends on benefits is thrice as much as the amount spent on public investments. The benefits include spending on Medicare, Medicaid and social security that amounted to $ 480 billion, $ 275 billion and $725 billion respectively in 2011. It also included payment of the food and nutrition assistance, federal retirees, and unemployment insurance (“CONVERSABLE ECONOMIST: Entitlements, Public Investment, and the Changing Nature of the U.S. Government”, 2012). This implies a strain on the government’s ability to inject money into the economy through its spending on investments. The difference in entitlement spending and investments is expected to rise as the baby boomers retire. The retirement benefits of the baby boomers will grow at a faster rate than wages and inflation. The pattern of government spending more on entitlements than investments has a negative impact on the national debt in the long-run. This may burden the future generations since the money is not spent on activities that generate income thus do not contribute to economic growth. The lack of investments may lead to budget deficits every financial year resulting in increased public debt to offset the deficit. This results in increasing debt without a corresponding increase in economic growth because the debt is used to finance activities that do not yield income. The government spending on social security, food stamps and other transfer programs is considered as consumption spending since there is no income gained from the spending. This implies that the government then is required to finance the spending from other activities that generate income such as increasing taxation. The effect of this is reduced investments by individuals that slow down economic growth and development. The investment spending on expenses such as infrastructure and education is healthy for the economy since it contributes to economic growth in the long-run. In conclusion, there is a need to change the government spending trends in such a way that more of the country's national income is spent on investment spending. Consumption spending only improves the livelihood of the citizens in the short-run, but it may have adverse impacts in the long-run. This may lead to accumulation of national debt that will burden the future generations. Increasing the government spending on investments ensures that the future generations will have the capital required to generate income leading to high economic growth. It is, therefore, important that the government raises the level of spending on investments rather than consumption spending.

Reference

CONVERSABLE ECONOMIST: Entitlements, Public Investment, and the Changing Nature of the U.S. Government. (n.d.). Retrieved from http://conversableeconomist.blogspot.com/2012/08/entitlements-public-investment-and.html