Applying Economics to Real-World Policies: Insights into Government Spending and Social Security

Cases: Applying Economics to the Real World student’s name name of institution course name and number instructor’s name due date Cases: Applying Economics to the Real World The application of economics to real world cases demonstrates how concepts could facilitate the interpretation of policies and led to better planning. A key area in the field is government spending and taxation and the role of the concepts in sustaining democracy. Changes in government spending and composition seek to increase the capacity of the government to meet the needs of its citizens (Marshall et al., 2022). Over the years, there has been a significant change in composition with the reduction in military spending and an increase in transfer of payments. While the changes have benefited some groups, they fail to favor the contributors of taxes in the middle-income groups. The case of social security is important since it highlights the limitations in the existing system in terms of sustainability and inequality (Falsetta et al., 2023). The program fails to meet the needs of the low-income groups and the black employees as a result of its payment structure that ends when retirees die. The cases on applying economics demonstrate the need to align taxation with changes in government spending and the need to change to current social security system to one that accommodates individual accounts for employee. Case 1: Government Spending and Taxation Change in Government Spending and Composition The United States government spending has changed significantly over the past decades to cover the critical needs of the American people. Government spending experienced a major increase during the First World War when it increased 7 times from $760 million in 1916 to $6 billion in 1920 before decreasing in the 1930s. Additionally, there was a major increase in the government spending during Second World War reaching $45 billion (Gwartney & Stroup, 2014). Other significant changes in the government spending were the increase during the Cold War Era and the Vietnam War. Consequently, the majority of the changes in the government expenditure in the 19th century towards the 1980s and 1990s resulted from the rise of the defense budget. The changes in the late 1990s and the 21st century have focused on facilitating programs that seek to increase access to key services for the American people. In particular, the rise in government spending in 2009 and during the COVID-19 pandemic ensured the access to stimulus packages for the consumers. During these periods, the composition of government spending changed to accommodate the challenges affecting the consumers during the crises occurring at the time (Marshall et al., 2022). The composition of government spending further shown a reduction in defen