Is government getting smaller? Date posted: June 1, 2012 A
national newspaper recently carried a headline stating that
government in the United States has been getting smaller. Given
all the borrowing and spending the federal government has done
during the recession, can this be true? N.C. State University
economist Mike Walden responds. “It’s useful to think of what
government does in two broad categories. The first category is
where government directly makes a product or delivers a service:
the military, the post office, roads, K-12 education would all
be examples. And we economists call this government production.
“The second category what government does, we call transfers,
and here government simply acts as a middle-man to move money
from some people to others. Social Security, Medicare, Medicaid,
Food Stamps are all examples of this. “And what the author of
the article was saying is, If you look in the last year, for the
first time … in 17 years, spending on government production —
that is, products or