[quote=CA renter][quote=faterikcartman][quote=briansd1] With government budget cuts, economic growth will continue to be anemic.[/quote]
Brian, do you really believe this? Seriously?[/quote]
Even the most hard-core right-wingers acknowledge that cutting government spending will decrease GDP.
Definition Gross Domestic Product. The total market value of all final goods and services produced in a country in a given year, equal to total consumer, investment and government spending, plus the value of exports, minus the value of imports.
The government has been spending money it doesn’t have (borrowing). If it contracts, it will obviously cause our GDP to shrink.
Don’t forget, the money that is spent by the government (counted as govt spending in GDP calculations) usually ends up as wages or transfer payments of some sort, which are then spent again, almost immediately (counted as consumer spending in GDP calculations). IMHO, reducing government spending will absolutely choke the economy, not just slow it down a bit.[/quote]
I think brian is right this, but only in the short-term. In the long-term, because money spent by the government is either borrowed or taken from the taxpayers, you have to pay it back or reduce the purchasing power of a consumer, resulting in a delayed de-leveraging or delayed spending reduction. Over time, it catches up to you.
The reduction in govt spending (which is actually a cut in the amount of spending growth – not an actual cut) will give us some short-term pain (I think enough to bring a 2012 recession), but we need the short-term pain to get us back on a sustainable path.
