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Revision as of 23:18, 18 January 2014 editEllenCT (talk | contribs)Extended confirmed users11,831 edits Replace deleted text per the amortization charts in the original source and obvious WP:CK math as per User_talk:EllenCT#Edits_to_Government_spending← Previous edit Revision as of 23:30, 18 January 2014 edit undoMorphh (talk | contribs)Extended confirmed users, Pending changes reviewers18,366 edits Undid revision 591338490 by EllenCT (talk) I see no mention of government subsidy returns in the amortization charts - discuss on talkNext edit →
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Government acquisition of goods and services intended to create future benefits, such as infrastructure investment or research spending, is called gross fixed capital formation, or government investment, which usually is the largest part of the government.<ref name=eugcf> ''Statistics Explained'' European Union Statistics Directorate, European Commission</ref> Acquisition of goods and services is made through production by the government (using the government's labour force, fixed assets and purchased goods and services for ]) or through purchases of goods and services from market producers. In ] or in ], investment is the amount purchased per unit time of ] which are not consumed but are to be used for future production (i.e. ]). Examples include ] or ] construction. Government acquisition of goods and services intended to create future benefits, such as infrastructure investment or research spending, is called gross fixed capital formation, or government investment, which usually is the largest part of the government.<ref name=eugcf> ''Statistics Explained'' European Union Statistics Directorate, European Commission</ref> Acquisition of goods and services is made through production by the government (using the government's labour force, fixed assets and purchased goods and services for ]) or through purchases of goods and services from market producers. In ] or in ], investment is the amount purchased per unit time of ] which are not consumed but are to be used for future production (i.e. ]). Examples include ] or ] construction.


⚫ Infrastructure spending is considered government ] because it will usually save money in the long run, and thereby reduce the ] of government liabilities. Spending on ] in the U.S. returns an average of about $1.92 for each $1.00 spent on nonresidential construction because it is almost always less expensive to maintain than repair or replace once it has become unusable.<ref>{{Cite report |first= Isabelle |last= Cohen |first2= Thomas |last2= Freiling |first3= Eric |last3= Robinson |date= January 2012 |title= ''The Economic Impact and Financing of Infrastructure Spending'' |type= report |publisher= Thomas Jefferson Program in Public Policy, College of William & Mary |location= Williamsburg, Virginia |url= http://www.aednet.org/government/pdf-2012/infrastructure_report.pdf |page= 5 |accessdate= October 1, 2012}}</ref> Likewise, ] expenditures can save several hundreds of billions of dollars per year in the U.S., because for example ] patients are more likely to be diagnosed at ] where curative treatment is typically a few outpatient visits, instead of at ] or later in an ] where treatment can involve years of hospitalization and is often terminal.<ref>{{cite pmid|15755330|noedit}}</ref>
]

⚫ Infrastructure spending is considered government ] because it will usually save money in the long run, and thereby reduce the ] of government liabilities. Spending on ] in the U.S. returns an average of about $1.92 for each $1.00 spent on nonresidential construction because it is almost always less expensive to maintain than repair or replace once it has become unusable.<ref>{{Cite report |first= Isabelle |last= Cohen |first2= Thomas |last2= Freiling |first3= Eric |last3= Robinson |date= January 2012 |title= ''The Economic Impact and Financing of Infrastructure Spending'' |type= report |publisher= Thomas Jefferson Program in Public Policy, College of William & Mary |location= Williamsburg, Virginia |url= http://www.aednet.org/government/pdf-2012/infrastructure_report.pdf |page= 5 |accessdate= October 1, 2012}}</ref> Similarly, public subsidy of college ] will increase the net present value of ] receipts because college educated taxpayers earn much more than those without college education.<ref>{{Cite report |first= Barry |last= Bosworth |first2= Gary |last2= Burtless |first3= C. Eugene |last3= Steuerle |date= December 1999 |title= Lifetime Earnings Patterns, the Distribution of Future Social Security Benefits, and the Impact of Pension Reform |type= report no. CRR WP 1999-06 |publisher= Center for Retirement Research at Boston College |location= Chestnut Hill, Massachusetts |url= http://urban.org/uploadedpdf/412137-lifetime-earnings.pdf |page= 43 |accessdate= October 1, 2012}}</ref> Likewise, ] expenditures can save several hundreds of billions of dollars per year in the U.S., because for example ] patients are more likely to be diagnosed at ] where curative treatment is typically a few outpatient visits, instead of at ] or later in an ] where treatment can involve years of hospitalization and is often terminal.<ref>{{cite pmid|15755330|noedit}}</ref>


== Transfer payments == == Transfer payments ==

Revision as of 23:30, 18 January 2014

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In National Income Accounting, government spending, government expenditure, or government spending on goods and services includes all government consumption and investment but excludes transfer payments made by a state. Government acquisition of goods and services for current use to directly satisfy individual or collective needs of the members of the community is classed as government final consumption expenditure. Government acquisition of goods and services intended to create future benefits, such as infrastructure investment or research spending, is classed as government investment (gross fixed capital formation). Government outlays that are not acquisition of goods and services, and instead represent transfers of money, such as social security payments, are called transfer payments and are not included in what the national income accounts refer to as government expenditure. The two types of government spending, on final consumption and on gross capital formation, together constitute 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 the fiscal policy response to an economic contraction. In Keynesian economics, increased government spending is thought to raise aggregate demand and increase consumption, which in turn leads to increased production. Keynesian economists argue that the Great Depression was ended by government spending programs such as the New Deal and military spending during World War II. According to the Keynesian view, a severe recession or depression may never end if the government does not intervene. Classical economists, on the other hand, believe that increased government spending exacerbates an economic contraction by shifting resources from the private sector, which they consider productive, to the public sector, which they consider unproductive.

Government spending can be financed by seigniorage, taxes, or government borrowing.

Current use: final consumption expenditure

Main article: Government final consumption expenditure

Government acquisition of goods and services for current use to directly satisfy individual or collective needs of the members of the community is called government final consumption expenditure (GFCE.) It is a purchase from the national accounts "use of income account" for goods and services directly satisfying of individual needs (individual consumption) or collective needs of members of the community (collective consumption). GFCE consists of the value of the goods and services produced by the government itself other than own-account capital formation and sales and of purchases by the government of goods and services produced by market producers that are supplied to households - without any transformation – as "social transfers" in kind.

Infrastructure and investment: gross fixed capital formation

Main article: Gross fixed capital formation Further information: Investment § In economics or macroeconomics

Government acquisition of goods and services intended to create future benefits, such as infrastructure investment or research spending, is called gross fixed capital formation, or government investment, which usually is the largest part of the government. Acquisition of goods and services is made through production by the government (using the government's labour force, fixed assets and purchased goods and services for intermediate consumption) or through purchases of goods and services from market producers. In economic theory or in macroeconomics, investment is the amount purchased per unit time of goods which are not consumed but are to be used for future production (i.e. capital). Examples include railroad or factory construction.

Infrastructure spending is considered government investment because it will usually save money in the long run, and thereby reduce the net present value of government liabilities. Spending on physical infrastructure in the U.S. returns an average of about $1.92 for each $1.00 spent on nonresidential construction because it is almost always less expensive to maintain than repair or replace once it has become unusable. Likewise, preventative health care expenditures can save several hundreds of billions of dollars per year in the U.S., because for example cancer patients are more likely to be diagnosed at Stage I where curative treatment is typically a few outpatient visits, instead of at Stage III or later in an emergency room where treatment can involve years of hospitalization and is often terminal.

Transfer payments

Main article: Transfer payment

Government expenditures that are not acquisition of goods and services, and instead just represent transfers of money, such as social security payments, are called transfer payments. These payments are considered to be exhaustive because they do not directly absorb resources or create output. In other words, the transfer is made without any exchange of goods or services. Examples of certain transfer payments include welfare (financial aid), social security, and government giving subsidies to certain businesses (firms).

International government spending

Per capita

Comparison of National Spending Per Citizen for the 20 Largest Economies.

In 2010, the Federal government of the USA spent an average of $11,041 per citizen (per capita). This compares to the 2010 World average spending of $2,376 per citizen and an average of $16,110 per citizen for the World's 20 largest economies (in terms of GDP). Of the 20 largest economies, only six spent less per citizen: South Korea ($4,557), Brazil ($2,813), Russia ($2,458), China ($1,010), and India ($226). Of the 13 that spent more, Norway and Sweden top the list with per citizen spending of $40,908 and $26,760 respectively.

As a percentage of GDP

Comparison of National Spending per GDP for the 20 Largest Economies.
Public spending / GDP in Europe.
Legend: maroon > 55%, red 50–55%, orange 45–50%, yellow 40–45%, green 35–40%, blue 30–35%

This is a list of countries by government spending as a percentage of gross domestic product (GDP) for the listed countries, according to the 2011 Index of Economic Freedom by The Heritage Foundation and The Wall Street Journal. Tax revenue is included for comparison.

Country Tax burden % GDP Govt. expend. % GDP
 Afghanistan 9.2 23.7
 Albania 23.3 28.8
 Algeria 10.4 43.1
 Angola 6.1 41.6
 Argentina 26.1 24.7
 Armenia 16.8 21.8
 Australia 30.8 34.3
 Austria 42.0 50.5
 Azerbaijan 17.7 31.1
 Bahamas 16.8 20.9
 Bahrain 4.8 25.7
 Bangladesh 8.8 15.9
 Barbados 32.9 41.3
 Belarus 30.4 49.6
 Belgium 46.5 50.0
 Belize 22.7 28.2
 Benin 17.2 23.0
 Bhutan 9.0 34.6
 Bolivia 28.5 34.8
 Bosnia and Herzegovina 37.6 50.3
 Botswana 30.2 40.2
 Brazil 34.4 41.0
 Bulgaria 33.3 37.3
 Burkina Faso 12.1 21.6
 Burma 3.0 8.0
 Burundi 18.0 40.0
 Cambodia 10.5 13.9
 Cameroon 18.5 18.5
 Canada 32.2 39.7
 Cape Verde 20.6 31.1
 Central African Republic 7.9 15.5
 Chad 5.3 22.1
 Chile 18.6 21.1
 China 18.0 20.8
 Colombia 19.3 26.5
 Comoros 10.8 27.2
 Congo 5.3 26.0
 DR Congo 13.1 22.7
 Costa Rica 15.6 20.9
 Ivory Coast 15.2 19.7
 Croatia 23.3 40.7
 Cuba 18.2 75.2
 Cyprus 39.2 42.6
 Czech Republic 36.2 42.9
 Denmark 48.2 56.0
 Djibouti 22.7 40.6
 Dominica 30.4 42.5
 Dominican Republic 15.0 19.1
 Ecuador 16.0 40.8
 Egypt 15.4 34.0
 El Salvador 13.0 20.0
 Equatorial Guinea 0.9 25.5
 Eritrea 50.0 38.9
 Estonia 32.3 39.9
 Ethiopia 9.9 19.4
 Fiji 21.1 25.0
 Finland 42.1 54.1
 France 42.9 56.1
 Gabon 9.9 20.1
 Gambia 19.2 26.0
 Georgia 24.9 36.4
 Germany 40.6 43.7
 Ghana 20.6 42.4
 Greece 35.1 46.8
 Guatemala 11.3 13.7
 Guinea 14.7 17.4
 Guinea-Bissau 10.2 38.8
 Guyana 20.2 48.6
 Haiti 10.3 18.2
 Honduras 16.3 21.8
 Hong Kong 13.0 18.6
 Hungary 40.5 49.2
 Iceland 36.3 46.1
 India 18.6 27.2
 Indonesia 13.3 19.2
 Iran 6.1 28.3
 Iraq N/A 69.8
 Ireland 30.8 42.0
 Israel 33.5 42.9
 Italy 43.1 48.8
 Jamaica 26.0 34.3
 Japan 28.3 37.1
 Jordan 18.3 36.1
 Kazakhstan 27.7 26.8
 Kenya 20.9 30.1
 Kiribati 20.7 85.9
 Kuwait 1.5 31.8
 Kyrgyzstan 23.3 29.3
 Laos 12.5 18.2
 Latvia 29.1 38.5
 Lebanon 16.6 34.2
 Lesotho 57.7 62.1
 Liberia 28.6 33.4
 Libya 3.4 43.0
 Lithuania 30.6 37.4
 Luxembourg 36.5 37.2
 Macau 25.9 14.9
 Macedonia 28.3 34.5
 Madagascar 12.9 18.5
 Malawi 16.5 38.0
 Malaysia 15.3 26.3
 Maldives 11.0 53.4
 Mali 15.0 21.2
 Malta 36.0 44.8
 Mauritania 13.4 29.5
 Mauritius 19.0 25.8
 Mexico 8.2 23.7
 Micronesia 11.9 66.9
 Moldova 33.4 41.6
 Mongolia 30.8 41.0
 Montenegro 30.0 48.8
 Morocco 26.9 29.1
 Mozambique 14.2 28.0
 Namibia 24.8 29.0
 Netherlands 39.8 45.9
   Nepal 10.4 19.7
 New Zealand 34.5 41.1
 Nicaragua 18.0 25.0
 Niger 11.4 23.8
 Nigeria 5.9 30.0
 Norway 42.8 44.6
 Oman 3.0 32.6
 Pakistan 10.2 19.3
 Panama 10.6 19.5
 Papua New Guinea 26.6 35.0
 Paraguay 11.8 14.8
 Peru 16.0 17.3
 Philippines 14.1 17.3
 Poland 34.9 43.3
 Portugal 37.7 46.1
 Qatar 4.9 27.0
 Romania 28.5 37.6
 Russia 34.1 34.1
 Rwanda 13.5 26.7
 Saint Lucia 27.5 30.9
 Saint Vincent and the Grenadines 25.6 34.1
 Samoa 23.0 32.7
 São Tomé and Príncipe 16.1 32.9
 Saudi Arabia 6.6 29.1
 Senegal 18.3 26.6
 Serbia 36.3 44.0
 Seychelles 28.1 39.8
 Sierra Leone 10.8 21.0
 Singapore 14.2 17.0
 Slovakia 29.3 34.8
 Slovenia 37.6 44.3
 Solomon Islands 29.6 55.9
 South Africa 25.7 27.4
 South Korea 26.6 30.0
 Spain 33.9 41.1
 Sri Lanka 13.3 22.6
 Suriname 21.1 25.6
 Swaziland 36.0 33.7
 Sweden 47.9 52.5
  Switzerland 29.4 32.0
 Syria 10.2 22.1
 Taiwan 12.9 18.5
 Tajikistan 18.7 27.5
 Tanzania 14.8 25.5
 Thailand 16.0 17.7
 East Timor 342.0 156.4
 Togo 16.3 19.5
 Tonga 25.7 29.9
 Trinidad and Tobago 19.4 28.4
 Tunisia 22.4 27.3
 Turkey 23.5 23.4
 Turkmenistan 21.8 12.3
 Uganda 11.9 17.8
 Ukraine 37.7 47.3
 United Arab Emirates 1.8 26.4
 United Kingdom 38.9 47.3
 United States 26.9 38.9
 Uruguay 17.9 28.0
 Uzbekistan 19.6 31.1
 Vanuatu 19.7 26.4
 Venezuela 13.6 34.0
 Vietnam 23.6 28.8
 Yemen 7.3 43.0
 Zambia 17.5 24.6
 Zimbabwe 31.7 97.8

United States of America

File:Us gov spending 2006 billions.png
Federal government spending in the United States for FY 2006 ($ billion)
Chart showing how the United States Congress spends the federal tax revenue.
Historical total state and Federal government spending in the United States from 1902 to 2010 (2008 estimate, percent GDP. 2009, 2010 'guesstimated' estimate)
File:Us gov spending histry by function 1902 2010.png
Historical federal government spending by major function in the United States from 1902 to 2010 (2008 estimate, percent GDP)

Government spending in the United States of America occurs at several levels of government, including primarily federal, state, and local governments. The Organisation for Economic Co-operation and Development (OECD) reports that total federal, state and local spending in the United States was $6.134 trillion in 2010.

Federal spending

Further information: United States federal budget
This section needs to be updated. Please help update this article to reflect recent events or newly available information. (November 2010)

As of September 2001 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, $646.7 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 insurance programs like Social Security, Medicare/Medicaid, the Supplemental Nutrition Assistance Program, and federal retirement and disability programs that provide benefits to federal civilian employees, members of the military, and veterans. Spending levels in these areas are dictated by the number of people who sign up for these benefits, rather than by Congress.

State and local spending

The United States Census Bureau conducts a Census of Governments every five years for fiscal years ending in 2 or 7. The latest fiscal year covered by the Census of Governments is 2007.

History

The United States Census Bureau publishes historical data on government spending in the United States in its Statistical Abstract of the United States and in its special release of historical statistics in 1976 at the time of the US Bicentennial.

Over the last century, overall government spending in the United States has increased substantially from about seven percent of GDP in 1902 to about 35 percent of GDP in 2010. Major spikes in spending occurred in World War I and World War II.

When broken down by major function, the history of US government spending as a percent of GDP shows a slow and consistent increase in education spending; it shows the spikes in defense spending during World War I and World War II, and the sustained high level maintained during the Cold War. Spending on welfare shows a clear takeoff during the Great Depression and a modest decline following reform in 1996. Spending on pensions (primarily Social Security) begins to show up in the 1950s. Health care spending takes off after the birth of Medicare and Medicaid in the 1960s and shows sustained growth ever since.

See also

2

References

  1. Robert Barro and Vittorio Grilli (1994), European Macroeconomics, Ch. 15–16. Macmillan, ISBN 0-333-57764-7.
  2. F. Lequiller, D. Blades: Understanding National Accounts, Paris: OECD 2006, pp. 127–30
  3. "Gross capital formation" Statistics Explained European Union Statistics Directorate, European Commission
  4. Cohen, Isabelle; Freiling, Thomas; Robinson, Eric (January 2012). The Economic Impact and Financing of Infrastructure Spending (PDF) (report). Williamsburg, Virginia: Thomas Jefferson Program in Public Policy, College of William & Mary. p. 5. Retrieved 1 October 2012.
  5. Attention: This template ({{cite pmid}}) is deprecated. To cite the publication identified by PMID 15755330, please use {{cite journal}} with |pmid=15755330 instead.
  6. Bishop, Matthew (2012). "Economics A-Z terms beginning with T;transfer". The Economist. Retrieved 11 July 2012. Payments that are made without any good or service being received in return. Much PUBLIC SPENDING goes on transfers, such as pensions and WELFARE benefits. Private-sector transfers include charitable donations and prizes to lottery winners.
  7. CIA World Factbook, population data from 2010, Spending and GDP data from 2011These numbers fail however to account for State and Local Government Spending which when included bring the per Capital Spending to $16,755
  8. 2013 Index of Economic Freedom
  9. An offshore investment fund underwrites government spending. For more information see: Kiribati information on economic freedom. Facts, data, analysis, charts and more. Heritage Foundation.
  10. Offshore petroleum projects are sources of tax revenue. For more information see: Timor-Leste information on economic freedom. Facts, data, analysis, charts and more. Heritage Foundation.
  11. http://www.gov.east-timor.org/old/fbea/wage_income_tax.php
  12. http://siakhenn.tripod.com/capita.html
  13. Federal Budget Spending and the National Debt
  14. "11. Government expenditure by function (COFOG)". OECD.Stats. Retrieved 18 April 2012.
  15. Statistical Abstract of the United States
  16. Bicentennial Edition: Historical Statistics of the United States, Colonial Times to 1970, Part 2

External links

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