Government Spending

Natalie Waits

Econ P.5

“U.S. Spending Cuts Seen as Key in Slowing Growth”

Nelson D. Schwartz

Posted on May 2, 2013

                On May 2, 2013, a shaking article was posted on “the New York times” website entitled, “U.S Spending Cuts Seen as Key in Slowing Growth.”  Government spending has been that topic in my economics classes this past week, how government spending affects us and our surroundings.  The way the government spends its money is crucial to our environment and the way we live out our daily lives.  Government spending can be both effective and ineffective.  Depends on the government I suppose.

                In a small military contractor business in Michigan, the workforce has already been reduced by 1/3 due to government spending cuts, but it’s not enough.  If the government continues the way it is more jobs with go in the coming months.  The pressure Mr. Kelly (the chief executive of the small business) felt is one reason markets were and are iffy about what the Labor Department’s latest report on unemployment and job creation revealed about the economy on May 3rd.  After a strong start to the year, government spending has had negative effects and it’s starting to show in the growth.

                The government spending is directly effecting our growth as a nation.  Without the impact of federal cuts and higher taxes, it is estimated that the annual economic growth would be close to 4 percent, above the 2.5 percent pace she is expecting in 2013.  But it is estimated that the economy would not fall back far enough to go into recession or experience a pronounced rise in unemployment.  “We’re not in a free fall, but it highlights the difficult nature of this recovery.”

                Government spending directly affects the way we live and the way we work as a society.  The government can affect us directly or indirectly, this article was an example of a way government spending directly affects our economy.  Mr. Kelly’s company is getting hit directly from government spending, ““We’re trying to sell the company. It’s sad because our technology is the next generation for the military.” Why should government spending affect so much of our economy?  New ways need to be brought up about how to change this for the better.