Entitlement Spending in Historical Perspective

ECONS 102

Washington State University

Essay 4: Entitlement Spending in Historical Perspective

The composition of government spending has dramatically changed from the 1960’s. In accordance with Timothy Taylor article, “Entitlements, Public Investment and the Changing Nature of the U.S. Government,” the U.S. Government’s spending on entitlement programs, such as Social Security, Medicare, Medicaid, unemployment, and food assistance programs are now three times that of the government’s investment spending. A stark contrast to when back in 1962, the government’s investment spending was 2.5 times more than consumption spending.  

Agreeably, the government’s consumption spending on entitlements is vital to the population if it is apportioned accurately. However, the lack of investment spending, such as on the infrastructure, and the amount of people currently taking advantage of the entitlement systems are draining the funding,  “Entitlements” were never initially meant to become “entitlements,” but rather assistance for people in time of great need. Investment spending, which is expenditures on fixed assets, such as transportation infrastructure; highways, bridges and train tracks is a more vital aspect of the needs of the population. The population needs both, consumption and investment spending; however investment spending should be a priority.

As an example of how the current decrease in investment spending is hampering the long – run future of our country, let’s take a look at the highway system.  A worker today on unemployment is on the receiving end of the government’s consumption spending.  Unemployment benefits are not enough to allow this person to save for retirement, nor is the unemployed contributing to the Social Security system. They may likely also be receiving other government entitlements, such as food assistance and Medicaid.  However, if they offered work as a construction worker on the highway system, they would be on the receiving end of the governments investment spending. They would hopefully be able to put a little money aside towards retirement and they would be contributing to the Social Security system. They would not be collecting any entitlements. It’s a win-win for both worker and government to be focusing their spending on investment spending, rather than consumption spending.