ABSTRACT
Principal reasons for cutting expenditure are that it enables the re-allocation of resources, it is arguably the most effective way of avoiding deficits and reducing debt, and it has the potential to reduce the size of government. In the post-war decades Keynesian policies relied on public expenditure for demand-management adjustments. According to the theory, if the economy was experiencing a downturn, aggregate public expenditure was increased to stimulate the economy. The implied Keynesian symmetry between expansions and reductions in government expenditures proved difficult to implement. Various reasons are often posited for this apparently inexorable law of expenditure growth. Some reasons highlight changing social and economic needs, or the appetites of politicians chasing votes in electoral markets. If there is a rational basis for expenditure cutting, the adversarial nature of politics is often cited as an impediment to rational expenditure management. Vote-bidding between competing political parties tends to ratchet-up expenditures.
