Reality Check on "Dramatically Reducing Govt Spending"

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iVillage Member
Registered: 06-28-1997
Reality Check on "Dramatically Reducing Govt Spending"
74
Thu, 11-17-2011 - 2:28pm

Here is an eye-opener for all of you "We need to dramatically cut Government Spending NOW, with NO increases in taxation!" crowd.

The graph below clearly shows the reversal in the decline of our Gross Domestic Product (GDP) after the implementation of President Obama's 'stimulus'. The 'why' behind this is the fact that Government Spending accounts for 38% of our GDP. The infusion of Federal funds actually worked to 'stimulate' Production - which is measured by the GDP - reversing the decline in GDP, and causing a near normal growth pattern in our GDP during the last two years.

Graph of Real Gross Domestic Product

Unfortunately, it seems to take significantly more than 'normal' growth in our national GDP to meaningfully reduce our currently horrific national unemployment figures. Comparing the above graph with the one below shows the direct effect on Employment of the huge dip of 4-5% in GDP following the Crash of '08 and the resultant Recession - an immediate rise from 5.5% unemployed to slightly over 10%. It also clearly illustrates how, once 'demand' suffers from high unemployment and consumer hesitancy, even 'normal' increases in our GDP do not quickly result in higher employment figures. (Interestingly, with so many still out of work, and the GDP going UP, someone is profiting from the increased productivity of our economy - and that someone is NOT American Workers. Who, I wonder, could those someones be?)

Now here's some quick math on the relationship between 'cutting' government spending and our GDP:

Percent of our GDP reliant upon Government Spending = 38%

So:

Cutting Government Spending by 10% would remove 3.8% from our GDP.

Please compare the two charts again and consider the immediate results of a 3.8% retraction in GDP on our national employment rate. Only this time the effects would happen when the unemployment rate is already in excess of 9%!

Now, explain to me how we don't need a 'balanced' approach of tax increases and smaller federal budget cuts to effectively reduce our Deficit without further damaging our economy.

And then explain how you will deal with the massive rise in unemployment resulting from the affects of

~ SW

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iVillage Member
Registered: 03-02-2009

And yet, the government still produces NOTHING.

"Resist, we much. We must, and we much. About that, be committed."

iVillage Member
Registered: 10-25-2006

About Northrop Gruman, from your post: "In 2005, for instance, the company won a $2 billion contract with Virginia to overhaul most of the state's IT operations.[18] "

Winning a contract is success only for NG--not for the State of VA. And, btw, the state of VA IS still government.

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http://www.pnhp.org/news/2009/october/meet_the_new_health_.php

http://www.youtube.com/watch?v=DQTBYQlQ7yM

iVillage Member
Registered: 05-13-2009
< If the US were to suddenly shut them out, all of them could happily find work in other areas or for other "clients"...>

What an absurd statement. Lockheed Martin does 60% of its work for the government. Boeing does nearly 80% of its business with the US Govt and its commercial business can not successfully complete with Airbus without pork barrel military subsidies.

The US Govt is the only customer for most of the goods and services supplied by these contractors, and few of these companies could survive if their single largest and most profitable customer no longer did business with them.
iVillage Member
Registered: 03-02-2009
So, in summary, the government produces nothing. The conservatives all knew this already. But the big government loving liberals didn't know this about the government that they so love. And none of them had the integrity to admit it.

"Resist, we much. We must, and we much. About that, be committed."

iVillage Member
Registered: 09-30-2011

< If the US were to suddenly shut them out, all of them could happily find work in other areas or for other "clients"...>

What an absurd statement. Lockheed Martin does 60% of its work for the government. Boeing does nearly 80% of its business with the US Govt and its commercial business can not successfully complete with Airbus without pork barrel military subsidies.

iVillage Member
Registered: 09-30-2011

So, in summary, the government produces nothing. The conservatives all knew this already. But the big government loving liberals didn't know this about the government that they so love. And none of them had the integrity to admit it.

You were really expecting something different? ; )

iVillage Member
Registered: 05-13-2009



The large defense contractors have a target market of one. If the US stopped defense spending, 43% of the total in the world, no other country would fill that full that void.

iVillage Member
Registered: 03-02-2009
chestnuthooligan wrote:



The large defense contractors have a target market of one. If the US stopped defense spending, 43% of the total in the world, no other country would fill that full that void.

In what bizzaro world would the people of this country stop all defense spending? The liberal bizzaro world, perhaps.

"Resist, we much. We must, and we much. About that, be committed."

iVillage Member
Registered: 05-13-2009

iVillage Member
Registered: 05-13-2009
BTW - Does US defense spending "produce" security perhaps?

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