Entitlement Spending in Historical Perspective
Defined as’ The process of spending on goods and service, whose value is not used in short period time’’, Investment Expenditure are the stimulator of economic growth through capital expenditure and increasing the production levels. However, over the years, the composition of Federal Government expenditure has been inclined more towards providing entitlements to the households rather than making investment expenditure. The graph below indicates how the composition of Federal Government Expenditure has changed over the years and Is shifting away from investment expenditure:
In order to discuss the growing burden on national debt amid shift in the government spending to entitlements, we must understand that entitlements are nothing except leverage from the treasury just as consumption expenditure which just meets the current needs and do not provide any potential future benefit as like Investment Expenditure. The results are also validated by US Budget for the fiscal year 2013 that indicated that during the year 2011, the Federal Government had mandatory entitlement spending amounting to $2 Trillion which was significantly higher than the investment expenditure of the country.
Hence, with decreasing investment expenditure which is expected to decline to only 5% of the total federal spending in few decades and increasing mandatory entitlement spending that will force the crowding-out effect, there is no doubt that the future generation will be faced with increasing government debt as reduced investment expenditure will be detrimental to the economic growth further inducing higher pressure on national debt as in the era of slow economic growth, government will only resort to borrowing to meet its mandatory entitlement spending.
Taylor, Timothy. Entitlements, Public Investment, and the Changing Nature of the U.S. Goverment. 2 August 2012. 15 November 2014 <http://conversableeconomist.blogspot.in/2012/08/entitlements-public-investment-and.html>.