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What is Public Spending?

Elise Czajkowski
Elise Czajkowski

Public spending is any sort of expenditure made by a government. These expenditures include everything from paying government employees to military spending to providing social benefits. Public spending is generally financed by levying taxes or borrowing.

The degree to which a government should spend money is a controversial political issue in many countries. Some argue that public spending is required to care for and protect citizens. Others argue that excessive public spending can dampen private enterprise and drive a country into debt.

One main area of public spending is social benefits. These include state pensions, disability payments, and welfare. These payments are often disapproved of by those who feel that the government should not be providing these services.

FDRs New Deal dramatically increased public spending.
FDRs New Deal dramatically increased public spending.

In many countries, a portion of government spending is devoted to health care. While some countries provide full government-funded health care to all citizens, others only provide government health care to the poor or elderly. In many countries, medical care must be provided in emergencies, regardless of a person's ability to pay medical costs. These costs are often then paid for by the government.

Another major element of public spending is education. In much of the world, primary education is provided by the state at no cost to pupils. In some places, free education extends through university.

Public spending also pays for military and defense expenditures. Much of this spending goes into research, as government research is often breaking ground in science. Defense spending can be controversial amongst anti-war groups, particularly the development and manufacturing of weapons.

The term public spending can also be used to describe paying the salaries of government employees. Government employment, often termed "the public sector," can include every position from elected and appointed political officials to career employees. The salaries of government employees are normally considered public information.

Historically, public spending increases in times of war when defense budgets are raised to assist in the war effort. In the United States, President Franklin Delano Roosevelt's "New Deal" dramatically increased public spending by hiring people from around the country to work, in the hopes of restarting the economy in the wake of the Great Depression. The extent to which government spending is helpful during a recession is debated by economists and politicians.

The main ways that the government raises money are by taxation and borrowing. The government taxes its citizens and the businesses doing business within its borders. Broadly speaking, a government that imposes higher taxes will provide more services to its citizens. In addition, governments will borrow both from foreign governments and its citizens in the form of government bonds.

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    • FDRs New Deal dramatically increased public spending.
      FDRs New Deal dramatically increased public spending.