Autonomous Expenditure

An autonomous expenditure refers to spending that is necessary. You might think all spending is necessary, but in macroeconomic terms, it is expenses that must be made such as for food, shelter, clothing or anything else where the need doesn’t change no matter what your income is. If you had no money, you would still need food, for example, and you'd fulfill it somehow...through borrowing, food stamps, going to a food bank or stealing it (Cue: Jean Valjean).

At the government level, autonomous expenditures are anything necessary to run the nation...such as building roads, health and human services, housing, social security, defense, etc. Most of the functions needed to carry on no matter how high or low the tax collections were for that year.

The debate will always continue as to what is necessary government spending.

Imagine driving on one of the main boulevards in your town. You know this road like the back of your hand. You know when it curves, the little dips along the way, and the potholes that have developed due to inclement weather. Now imagine that same day, taking a trip to see your Aunt Lucy who lives about one hour away. There are no short cuts to her house and you must drive through three towns to get to her even though there is a bay that sits between the two towns.

Fast Forward to one year later...You’re driving on the same highway and you notice that the potholes and dips are fixed. Then you decide to visit Aunt Lucy, but you no longer have to take the long way thanks to a new connecting bridge. Finally, the government has answered your prayers and invested in the infrastructure.

For you, this is an autonomous investment. But to people in your town who don't have an Aunt Lucy across the bay, it's just another wasteful example of pork barrel government.