We must make a distinction between fiscal deficits related to current expenditures and investment spending.

A central question, of course, concerns the type of government spending that should qualify as investment spending, and which European investment projects should be supported. It will be impossible to define new and sensible European projects worth 200 billion per year.

Health spending Health spending Spending

Until 2003, the Government's investment in education had amounted to Dirham 5.5 billion or 25.6 percent of total federal government spending.

First, Peru is promoting the limitation of defence spending at the regional level in order to release resources for social investment.

In the US, public investment spending has been slashed. Neither the federal government nor the states have political mandates, funding strategies, or long term plans to catalyze investment in the next generation of smart, clean technologies.

Nor do Keynesians think through the kinds of public investments that are needed for them, spending is spending. The result is a public sector vacuum and a dearth of public investments, which in turn holds back necessary private sector investment.

That is why quantitative easing should be run in conjunction with a eurozone wide investment program designed to modernize the creaking infrastructure of eastern and southern Europe. Capital spending by governments, unlike current spending, can be self financing through user charges.

Second, the financial system both banks and non bank institutions is severely damaged. Lack of robust credit growth will hamper private consumption and investment spending.

In that way, we can make investment and social spending sustainable in the medium and long term and thereby reduce our dependence on external resources.

68. The restrictive public investment policy imposed by the economic adjustments agreed with the IMF triggered a drastic drop in the Government apos s social spending.

Both countries have massive surpluses of savings over investment and huge trade surpluses. Both parade their fiscal virtue and insist that deficit countries stop their irresponsible spending.

Other emerging countries are also unlikely to absorb much of China s capital. Notwithstanding its advocacy of public investment spending, even the IMF accepts that a sudden increase in public investment is more likely to cause developing country indebtedness than growth.

It was recognized that the pressing needs for investment and public spending in developing countries make it difficult to find political support for maintaining this course of action.

Spending rate

Social spending

Spending it?

(f) Military spending, and the extent to which spending on external security can be translated into spending on social security .

The supply siders, for their part, seem utterly oblivious to the dependence of private investment on complementary public investment and a clear policy and regulatory framework. They advocate slashing government spending, naively believing that the private sector will somehow magically fill the void.

Industry could be safely left in private hands, provided the state guaranteed enough spending power in the economy to maintain a full employment level of investment. This could be achieved by monetary and fiscal policy low interest rates and large state investment programs.

The government can borrow all it wants from the bond markets at near zero interest rates. Outsourcing such borrowing power to a National Investment Bank is merely a way to signal that any additional borrowing will be used for investment, not for current spending.

There is, however, a lot that the government could do about investment, which has fallen by almost four percentage points of GDP since 2000, to just over 17 in 2013 low by international standards. The government could shift more government spending toward infrastructure investment.

Public spending patterns

China successfully navigated the crisis, avoiding a significant slowdown, by ramping up public spending. But, as a result, it now has no further scope for increasing public consumption or investment.

In addition to more investment, India needs less consumption and higher savings. The government has taken a first step by tightening its own budget and spending less, especially on distortionary subsidies.

In the US, investment spending declined from 23.6 of GDP in 1990 to 19.3 in 2013, and fell even more markedly in net terms (gross investment excluding capital depreciation). In the European Union, the decline was from 24 of GDP in 1990 to 18.1 in 2013.

The problem is that more than half of such spending is on education, science and technology, and infrastructure the areas that Obama had just argued should be strengthened. After telling Americans how important government investment is for modern growth, he promised to freeze that spending for the next five years!

It perpetuates deficit spending.

State spending on health

PUBLIC SPENDING ON HEALTH

A little spending money.

Not so, replies strategic investment analyst H. Wood Brock in an interesting new book, The American Gridlock. A proper assessment, Brock argues, depends on the composition and quality of total government spending.

Company cash is not the only source of considerable spending power waiting on the sidelines. Rich households also hold significant resources that could be deployed in support of both consumption and investment.

It also results from a reduction in public spending and investment as a consequence of the implementation of a stand by agreement for 1996 1997 signed with the International Monetary Fund (IMF).

Looking ahead, strong headwinds imply that it will be difficult to achieve better economic performance in the rest of the year. Higher energy prices are reducing real household spending on non energy goods and services weakness in Europe and Asia will hurt America s exports state and local governments are cutting their spending and concerns about higher taxes in 2013 will dampen both business investment and big ticket consumer spending.

Higher consumer spending and increased residential investment boosted demand for labor, resulting in a rise in payroll employment of 288,000 in April, up from a monthly average of less than 200,000 earlier in the year. If that continues, it will lead to a faster rate of increase in household incomes and spending.

In the long run, if primary surpluses are achieved by controlling spending, the increase in national saving will promote investment and growth, whereas higher tax rates would work in the opposite direction. Successful post World War II fiscal consolidation in OECD countries averaged 5 6 in spending cuts per 1 of tax hikes.

Of course, in the West, an investment plan invites criticism from those who prefer that we do nothing but talk about growth strategies. Indeed, critics argue that raising public investment conflicts with the drive to reduce deficits, and warn of higher interest rates on the back of further spending.

Policies aimed at increasing female labor force participation and lowering private education spending would also help. At the same time, South Korea should work to improve the investment climate to raise the quantity and quality of investment, particularly of small and medium size enterprises (SMEs) in the services industry.

But we're spending 36 percent.

Just look at this spending.

Are they spending the night?

Stability of social spending is crucial, inasmuch as instability and fluctuations reduce the efficiency of social spending.

Governments should therefore restrict spending cuts to those that will not cause the economy to contract. Likewise, they should increase only those taxes that, when raised, do not reduce consumption, investment, or job creation.

Unless and until America s private sector recovers, investment and job creation will continue to stagnate. But today s atmosphere of fear and aggressive budget tactics are combining to undermine private sector confidence and spending power.