Accession Number : ADA502731
Title : The Size and Role of Government: Economic Issues
Descriptive Note : Congressional rept.
Corporate Author : LIBRARY OF CONGRESS WASHINGTON DC CONGRESSIONAL RESEARCH SERVICE
Personal Author(s) : Labonte, Marc
Report Date : 01 Jul 2009
Pagination or Media Count : 31
Abstract : The size and role of the government is one of the most fundamental and enduring debates in American politics. Economics can be used to analyze the relative merits of government intervention in the economy in specific areas, but it cannot answer the question of whether there is too much or too little government activity overall. That is not to say that one cannot find many examples of government programs that economists would consider to be highly inefficient, if not counterproductive, ways to achieve policy goals. Reducing inefficient government spending would benefit the economy; however, reducing efficient government spending would harm it, and reducing the size of government could involve either one. Government intervention can increase economic efficiency when market failures or externalities exist. Political choices may lead to second-best economic outcomes, however, and some argue that, for that reason, market failures can be preferable to government intervention. In the absence of market failures and externalities, there is little economic justification for government intervention, which lowers efficiency and probably economic growth. But government intervention is often based on the desire to achieve social goals, such as income redistribution. Economics cannot quantitatively value social goals, although it can often offer suggestions for how to achieve those goals in the least costly way. The size of government has increased significantly since the financial crisis of 2008 as a result of the government's unplanned intervention in financial markets and subsequent stimulus legislation. Much of this increase in government spending could be reversed when financial conditions return to normal, although critics are skeptical about how easy it will be for the government to extricate itself from the new commitments it has made.
Descriptors : *POLICIES , *SIZES(DIMENSIONS) , *INTERVENTION , *ROLES(BEHAVIOR) , *UNITED STATES GOVERNMENT , *MACROECONOMICS , SOCIAL SECURITY , ECONOMIC DEVELOPMENT , MEDICARE , TAXES , FEDERAL LAW , INCOME , PAYMENT , REGULATIONS , EFFICIENCY , NATIONAL DEFENSE
Subject Categories : Economics and Cost Analysis
Government and Political Science
Sociology and Law
Distribution Statement : APPROVED FOR PUBLIC RELEASE