As the video explains, government spending on entitlements and redistribution programs amounts to 28.4 percent of GDP, while only 8.9 percent is spent on everything else. Unlike legitimate public goods,
this kind of spending is used to buy votes for politicians. This is the same path which lead to the fiscal collapse of a number of European welfare states.
Overall, the video concisely articulates four reasons to be weary of excessive government spending:
1) It crowds out private growth 2) It requires destructive levels of taxation 3) It created deficits and a massive debt
4) It violates the Constitutional prescription of limited government
"Despite overwhelming evidence, many politicians think that the path to prosperity travels through Washington," said CF&P Foundation
President Andrew Quinlan. "Even when they cast political handouts as investment, it doesn't change the fundamental reality that excessive government spending only leads to ruin," he concluded.
"American politicians are repeating the mistakes of Greece," added Dan Mitchell of the Cato Institute. "Unless major adjustments are made," he warned, "our
crisis will come when the baby boom generation has retired and it's time to make good on the empty promises to fund Social Security, Medicare, and Medicaid."
This Economics 101 video from the Center for Freedom and Prosperity explains that excessive government spending undermines prosperity by diverting resources from the productive sector of the
economy. Moreover, the two main ways of financing government – taxes and borrowing – cause additional economic damage.
This new video is part of CF&P's Economics 101 video series, which is designed to explain free market concepts, with
particular emphasis on reaching students and young people. This is the eleventh video in the series.