Government and the Economy - Essay Example

This is the foremost time of experiencing such an occurrence in more than four decades. The expenditure of the federal administration has been rising at a decidedly sluggish pace in the three years of the prevailing administration. Falling expenditures of regional and area administrations, which have equally shrunk in spending at an alarming rate, plummets the slow rise. The slow growth of federal spending along with the free-falling expenditure of regional administrations is a strong pointer at the economic and political situation in the country.

These signs cannot pass unnoticed because failure to experience rise on government expenditure, more so during the initial period of a new administration, is not only rare but profoundly significant in the political and economic essence. The real GDP of government (both federal and regional) for the primary three months of 2012 is estimated to be 2 per cent less than 2009, when the new administration took the reigns of power. This means that the spending of the administration has experienced a fall ever since the forming of government in 2009 implying that certain factors have inhibited the outlay of funds by administrations, both central and local.

Such a situation transpired in the US in the course of Richard Nixon’s reign and was attributed to the waning expenditure on the Vietnam conflict. Currently, it is unclear which factors are responsible for the slow growth as well as the falling spending by regimes at the central and local level in the sense that a number of dynamics govern economic growth. Government policies play a prominent role. However, sometimes growth rate can also be attributed to luck of the incumbent regarding the state of the economy when he inherited reigns of power.

The current administration took power at the time when the recession was ending. However, the recovery and growth has been remarkably sluggish. The reasons for slow economic growth, which has led to low spending by government under the prevailing regime that ranks lowest in history, have been myriad. The failure to step up government spending emanated from the feeble private sector, which made it difficult for the economy to expand at a high speed (Norris B2). The growth of the private sector is a noteworthy gauge of the circumstances of the economy because it denotes the growth rate of the economy.

Changes in spending by the government are because of the expenditure on military disbursement, which has grown dismally in the past few years irrespective of the fall in expenses of Afghanistan as well as Iraq conflicts. On the other hand, nonmilitary outlay has witnessed an upward trend under the prevailing administration. In situations when economy is weak, outlay on investment by central and area governments often fall (through cutbacks) to reflect the state of the economy. Such expenditures include highways and educational institutions like schools and colleges.

In essence, falling operating outlays are not new to the US economy and have been part of the country particularly in times of economic difficulty. Therefore, money saving schemes like retrenchment of tutors has not prevailed in the recent past although the number of workers in education has been low. In conclusion, the federal, state, and local governments have been shrinking in the last three years, and this means that the US