Question

The U.S. federal budget is the focal point for debate on the role of government. Identify and explain one argument for and against increased government spending. Which side do you tend to agree with and why? This is not intended to be a political discussion, so let's keep our focus on the economic implications

Answer 1

               Budget shows revenues and expenditures of the government for a year or a particular period of time. The U.S. federal budget is the focal point for debate on the role of government as due to the increased government spending country is facing budget deficit.

*Budget deficit means government expenditures or spending are more than its revenue.

Arguments for increased government spending-

1. Increase in economic welfare- if government has increased its spending it means that developmental works will increase in the country. The more government spending means more money people will have in their pockets it will increase aggregate demand.
2. Increase in employment- With the increase in development projects or work employment opportunities will increase which further leads to faster economic growth.
3. Infrastructure development- Higher spending by government on infrastructure such as roads, railways, hospitals, schools etc. leads to increase in human development which makes economy efficient. This increases economic growth in long – run.

Arguments against increased government spending-

1. Increases financial burden on government- increased government spending increases financial burden on government which affects economic growth negatively in long- run because government take debt from outside to finance their spending and have to pay heavy amount in return as interest payment.
2. Increased government spending leads to budget deficit- if government spending increases it widen their budget deficit which tend to crowd out the private sector it diverts economy towards high inflation.
3. Increases tax burden on people- to reduce its budget deficit government increases tax which reduces consumption expenditure of people further leads to decrease in aggregate demand. It affects stability of economy as taxes slow down economic growth.   

Government spending are important for growth of economy but it should not increase so much that it become thread for economy. So I do not agree with increase in government spending more because it will leads downfall of economy in the long-run.

• I have written more than one arguments hope it will help you. Thank you.