Planet Money Summer School Govt 3: You are what you pay for (Budgets)
Jul 23, 2025
Aviva Arundine, Director of the Hamilton Project at Brookings, shares her insights from years at the Treasury and Office of Management and Budget. She dives into how government prioritizes spending amidst budget constraints and national debt. Topics include the complexity of balancing necessary expenditures like Medicare with fiscal responsibility, the impact of lobbying on budget decisions, and how financial decisions affect social programs. The discussion sheds light on the dynamic tension between local demands and national fiscal policies.
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Limits on Government Spending
- The US government can't do everything it wants despite appearing able to spend endlessly.
- The rising debt emphasizes limits and the need to prioritize spending wisely.
Why Governments Borrow
- Governments might borrow rather than balance budgets every year due to tax base and investment needs.
- Debt growth faster than the economy is concerning for future fiscal stability.
Why Government Spends Money
- Government spending can be grouped into addressing market failures or redistributing income.
- National defense is a classic example of a public good the market won't provide.