The Weak Case For Government-Financed Research And Development Share Share Trending While it’s true that every penny in the budget requires money to be diverted from the economy’s productive sector, not all government spending is created equal when considering the impact on growth. Some types of spending, such as redistribution programs, are doubly harmful to prosperity. The economy is first hurt by the taxes needed to finance the programs, and then the economy is hurt because the programs give people incentives to rely on the government rather than work. Other types of spending, however, require a cost-benefit analysis.