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'Government spending' or 'government expenditure' consists of government purchases, which can be financed by seigniorage (the creation of money for government funding, at a heavy price of high inflation and other possibly devastating consequences), taxes, or government borrowing. It is considered to be one of the major components of gross domestic product.
John Maynard Keynes was one of the first economists to advocate government deficit spending as part of a fiscal policy to cure an economic contraction. In Keynesian economics, increased government spending is thought to raise aggregate demand and increase consumption.

Contents

European Union

United Kingdom

United States

References

See also

European Union

United Kingdom

Main articles: United Kingdom budget

In the Parliamentary democracy, the UK government has greatly increased public sector spending (i.e. government spending of taxes) since 1995, and annual spending on investment in infrastructure has grown from £5.6 billion in 1997 to £29 billion in 2006.

United States

Main articles: United States federal budget

As of September 2004 the U.S. Congressional Budget Office reported that federal government spending for 2004 was projected to be $2.293 trillion, or slightly less than 20% of the GDP. Of that, $159 billion was for net interest, $486 billion for defense, $492 billion for Social Security, $473 billion for Medicare and Medicaid, $191 billion for various welfare programs, $136 billion for "retirement and disability" benefits, and $64 billion was projected to be spent elsewhere.
There are two types of government spending — discretionary and mandatory. Discretionary spending, which accounts for roughly one-third of all Federal spending, includes money for things like the Army, FBI, the Coast Guard, and highway projects. Congress explicitly determines how much to spend (or not spend) on these programs on an annual basis. Mandatory spending accounts for two-thirds of all government spending. This kind of spending is authorized by permanent laws. It includes "entitlements" like Social Security, Medicare, and Food Stamps — programs through which individuals receive benefits based on their age, income, or other criteria. Spending levels in these areas are dictated by the number of people who sign up for these benefits, rather than by Congress.

References

★ CBO's Current Budget Projections, Congressional Budget Office, ''March 2, 2007''.

See also

★ Government operations