Quote by Martin Feldstein
Increased government spending can provide a temporary stimulus to demand and output but in the longer run higher levels of government spending crowd out private investment or require higher taxes that weaken growth by reducing incentives to save, invest, innovate, and work.
Summary
This quote suggests that while increased government spending can boost demand and output in the short term, it has negative consequences in the long term. The higher levels of government spending may lead to a decrease in private investment as resources get allocated towards public projects. Alternatively, to fund this increased spending, higher taxes might be imposed, which can then reduce incentives for individuals to save, invest, innovate, and work. Thus, this quote argues that the long-term impact of increased government spending can be detrimental to economic growth.
Topics
Government
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