[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 reject your premise. You’re advocating another artificial bubble as a good thing. If I borrow $1M and start spending it, it outwardly appears I am wealthy and in great economic shape. What happens when I have to pay it back?
Brian misunderstands the current debt deals being worked out in Washington. There is not a single dollar of budget cuts on the table. There are only reductions in baseline increases. No cuts, only smaller increases. And, mark my words, future congresses aren’t going to limit their increases anyway.
Brian also subscribes to the idea that government spending can create economic growth. In fact, he seems to believe that economic growth is not possible if government spending is cut. This alone should get him a 48 hour hold for observation as tax cuts have spurred some of our nation’s greatest periods of growth.
If your way of thinking were reality, we could solve all our problems by just making everyone a government employee. Hopefully you understand this wouldn’t work as there would be no one left to pay them. Government workers do not help an economy. Creating more government jobs does not solve our unemployment problem.
Jobs that help an economy are ones where people provide goods and services that other people want, and are willing to exchange their own labor to receive — of their free will in a free market. Government jobs too often provide things people wouldn’t pay for themselves if given a choice.
The reality is people won’t willingly work hard to exchange their own goods or services for many, if not most, of the wonderful things government is said to provide. Rather, they pay taxes because they fear the IRS arresting them, putting them in jail, and shooting them if they physically resist. Generally, government goodies are not seen as something to pay for, rather, they are seen as an entitlement that is received for nothing in exchange.
The former Soviet Union has already proven what happens when people are expected to produce things under threat of force, rather than in a free market. And supporting people who won’t work (note that I didn’t say can’t work) only encourages them to be lazy and dependent. People work hard when they can keep most of what they produce and exchange it for things they want. It doesn’t sound touchy-feely, but having to work to survive is a great motivator. I suggest everyone read “The Grapes of Wrath”.
Economies thrive when people are willingly producing and exchanging more. And people always want more. Always.
So the answer is to let people keep more of what they make, i.e., lower taxes. Obviously this should go hand in hand with lower spending, though neither will happen, along with lower regulatory barriers that help drive manufacturing overseas. Shocking as this may sound, consumers spending their own money rather than money the government borrows from their children also gets counted as GDP.
As for non-government worker stimulus spending, cutting that should be easy. This spending didn’t work and should have stopped yesterday.
Instead it looks like the old west medicine show in Washington. If a spoonful didn’t cure you, you must need the whole bottle! Doesn’t it occur to anyone this just might be bad medicine?
I mention all of this because I’m convinced a lot of people read and hear about economics in the news but, IMO, fail to understand the foundations of basic economic theory.
Now I know people like Brian are dyed-in-the-wool lefties, but you should think your way out of this CA Renter.
If the government paid everyone in the USA $100,000 a year to contemplate the fate of the Kangaroo Rat — and that’s all anyone did — your cited definition and belief states that the GDP of the USA would be $30,000,000,000,000. Call me a dinosaur clinging to the Austrian School, but I’m telling you the GDP of the USA in such a scenario wouldn’t be worth a hill of beans.
So you may keep up the appearance of economic health, but it isn’t real and some day the piper will be due. I consider foisting the problem on future generations morally repugnant so I’m all for taking our medicine now. Not only do we deserve it, but we’ll keep the pain more brief and less damaging than if we artificially pumped things up and kicked the can down the road.
In ’09 Roubini talked about how we can get off the bubble train: http://www.forbes.com/2009/08/26/stimulus-recession-fiscal-monetary-liquidity-taxes-opinions-columnists-nouriel-roubini.html
Well two years on and the Dems and the Republicans just said no to fiscal sustainability and yes to a spend and borrow economy. You guys are in the yes camp as well. But, like Roubini, I think it is only going to make things worse in the long run. We can’t artificially pump things up forever, though clearly hope springs eternal in some camps.
So while the definition of “GDP” may say it increases as government spending increases, I disagree with the notion that the government can spend its way out of a recession and into real greater growth. And I believe history is on my side. You wouldn’t choke the economy at all if, as you cut government spending, you cut taxes. It reminds me of the lie perpetuated with this latest crises: that we’ll default if the debt limit isn’t increased. The answer, always there of course, was that we had plenty of money to pay the nation’s debt’s if only we would cut spending elsewhere. Framing the debate appears essential to winning in politics — and on that score the Dems get an A and the Repubs an F — but it doesn’t necessarily get you the right answer.
