Operating vs. Capital Expenditures

John Kay is a leading British economist and a thoughtful commentator. Look under Interesting Articles to your right to read his March 7, 2012 article in the Financial Times. He notes that, "It is always easier to reduce public spending by deferring capital spending than by constraining current expenditure ... The process is self-defeating, because it increases rather than reduces the pressure on public expenditure in the future." He goes on to comment, "Within the capital budget, grand projects tend to squeeze out modest improvements."