The government’s investment in human and physical capital Government Spending: The government’s investment in human and physical capital

I. The Government Spends Money for the Good of the Public All levels of government – federal, state and local – spend money to provide goods and services for people. Examples of public goods are highways, defense, police and fire protection. Public utilities for example are electric and gas power.

II. What Goods and Services Are Provided by the Federal Government? The federal government spends the largest amount of money on income security, or payments that protect people’s incomes. The second largest amount of money is spent on national defense. The national debt or interest owed on money borrowed by the government is the third largest category of spending. The next largest amount is spent on health care for the elderly, poor disabled, and people who have served in the military.

Federal spending also pays for education, employment and social services. There are many other areas of spending, such as natural resources, transportation, agriculture, court and international trade.