Government Spending
Jonathan Osler San Francisco believes that a country’s spending is how much it spends on things in general. This includes defense, federal benefits, or income programs such as welfare, retirement pensions, unemployment benefits, and federally funded research. The higher the overall spending, the more military or other defense programs a country will have or have supported. The higher the overall spending, the more support for social spending. Generally, high government spending is a sign of good economic times for many people and countries, sometimes accompanied by inflation and deficits.
Ways in which the government spend
1. Budgets: The government’s spending is usually through the federal budget, a set of laws made by Congress, which funds each part of the government. In a developed country like America, at least its two branches (the executive and legislative branches) must agree on what part of the federal budget gets spent. If different parts of the government disagree on what to spend their budgets on, that area can become politically controversial. For example, in December 2011, Congress debated how much to spend on deficit reduction in 2012 or 2013.
2. Military spending: States and local governments can also spend their budgets on things that benefit the military, such as equipment or buildings. Military spending is heavily criticized because it often leads to the national debt. There are many ways to spend money on the military in America. Still, there are two main ones: defense spending (the budget for the army, navy, etc.) and military aid (money given by other countries). Defense spending has been a massive part of American history since its first use during the Revolutionary War against Britain. In 2010, military spending accounted for more than one-quarter of all federal government spending.
3. Debt ceiling: According to Jonathan Osler San Francisco, The debt ceiling is a law that sets how much total national debt is allowed by the US government. This ceiling initially allowed for $1 trillion more debt, but it was increased over time to its current level of about $16 trillion. The United States House of Representatives has the power to raise this limit and pass laws governing it, which has happened over 200 times since 1960 (The Debt Ceiling). In the summer of 2011, a debt ceiling bill was passed without disagreement (The Debt Ceiling).
4. Interest rates: Osler says the government spends a lot on interest because it must use that money to pay back past debts and pay on its existing debts. In the United States, the Federal Reserve pays interest on its bonds every year or so. This is meant to encourage state governments, utility companies, and other big borrowers to borrow money to finance their projects. When the Federal Reserve pays interest to China for its loans, that is another way for the United States government to spend more money: the country will keep borrowing from other countries and make payments at regular intervals (interest payment).
Government spending is one way some countries benefit from the capitalist economic system. When overall government spending increases, well-being, and living standards rise within a country because social programs such as unemployment benefits and pensions increase. When government spending increases, revenue decreases, leading to higher tax rates and personal living costs. Government spending has been used in many different ways; for example, it was used during the Great Depression of the 1930s to boost the economy.
