Entitlement Spending in Historical Perspective - Essay Example

En ments, Public Investment, and the Changing Nature of the U.S. Government The federal governmentfocuses its spending on 3 major areas. That is, social security, Medicare and Medicaid. As demonstrated in the graph below, this trend is steady and the programs consume a larger part of the Federal budget of approximately 47%. Non-mandatory programs take a small part of the budget. The graph above shows that spending on mandatory programs has been on the increase since 1962 and this trend is projected to increase for the upcoming periods.

While the government is spending more on social programs, its investment initiatives has been on the instance. For instance, the graph below clearly demonstrates that investment spending has had a steady decline since 1962. Generally, total spending has been on stable decline even though one could argue that investment on education and training is somehow stable. It is no clear the main reason for this decline but it is just shows one of the areas that needs investment. Reduced investments in key areas of the economy can sometimes lead to burden in the national debt.

This is because the government might be forced to borrow in order to offer the required services to the public-especially in areas characterized by low investments. This is witnessed especially when in the case of investments and entitlements as highlighted below. The nature of what the federal government does is shifting over time. As compared to earlier years when the government mainly focused on providing goods and services to its citizens, the current government tends to focus on becoming a conduit for payments to households.

From the article by Tim Taylor, it is clear that the entitlements are squeezing out public investments. For instance, federal government spending in 1962 on investments was two and half times more than entitlements. However, this has since changed whereby entitlement spending is thrice spending on investments. It is worth noting that this trend does not show any sign that it will change soon as benefits of the public grow faster than inflation and wages. This is shown in the graph below: Any country that borrows simply passes the debt burden to the next generation.

Lack of investments in key areas can result to the country being a net borrower hence passing the burden to the next generation. Federal investment comprises of the part of Federal spending intended to yield long-term benefits for the country’s economy. Federal investment is one of the ways that the government can use to promote efficiency within the Federal agencies in addition to growth in the national economy through increasing the overall stock of capital. As much as investment takes a vital role in the growth of the economy, consumption plays a similar role of stimulating the growth of the economy.

Government spending such as investment in education and technology, R&D, infrastructure constitute investment category of spending; while military spending, social security, Medicare, Medicaid and much more constitute the consumption category of the federal government spending. Consumption and investment are both stimulants of the economy through multiplier effect hence a government should design a way of balancing its consumption and investment. In this regard, the investment trend reflected above should be a worry to the federal government.

Reference Taylor, Timothy. "Entitlements, Public Investment, and the Changing Nature of the U.S. Government." CONVERSABLE ECONOMIST, THURSDAY, AUGUST 2, 2012: 2-4.