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: 09-30-2011

The US spends 20% on defense...which is a very broad catagory.

iVillage Member
Registered: 03-02-2009
When did they stop being the Red Chinese? As far as I can tell, they still are. And they are developing weapon systems and building up their military. It wouldn't be very wise for us to fall behind now.

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

iVillage Member
Registered: 05-13-2009
Actually in 2011 defense spending is 23percent, 24 healthcare, and 21 ss of the budget, to be clear.

The fact that we spend 6 times more than anyone else on defense spending is what freaks outs my fiscally conservatively, socially liberal, psyche. But I've always been on the butter side of the guns and butter debate.
iVillage Member
Registered: 05-13-2009
Really, Red Chinese. I haven't heard that since the 60s.

We would have to be really, really bad at military spending since we spend 6x more than they do.
iVillage Member
Registered: 03-02-2009

The frightening thing is that liberals don't bat an eye at us spending a whopping 47% of our entire budget on SS & MC. At least defense has been there from the beginning, these other two programs aren't even a hundred years old, yet they eat up half the budget.

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

iVillage Member
Registered: 09-30-2011

Actually in 2011 defense spending is 23percent, 24 healthcare, and 21 ss of the budget, to be clear.

I was looking at the 2010 budget...but it's of little matter.

The fact that we spend 6 times more than anyone else on defense spending is what freaks outs my fiscally conservatively, socially liberal, psyche. But I've always been on the butter side of the guns and butter debate.

Why?

iVillage Member
Registered: 05-13-2009
Well,, since you are such a historian, why has the defense budget increased from under 10percent of GDP in 1910 to 43per cent of GDP 2010?

At least ss and Medicare were funded by targeted payroll taxes.
iVillage Member
Registered: 09-30-2011

They invented airplanes and rocketships? ; )

iVillage Member
Registered: 05-13-2009
The Russians?
iVillage Member
Registered: 03-02-2009
chestnuthooligan wrote:
Well,, since you are such a historian, why has the defense budget increased from under 10percent of GDP in 1910 to 43per cent of GDP 2010?

At least ss and Medicare were funded by targeted payroll taxes.

Well, since I am such a history, I'm not going to bother to even look it up! I say defense spending has gone up because the need for a larger military has increased, and of course, these things are not cheap. Hi tech electronics, stealth, nuclear development, black programs... Etc. None of that existed way back when.

Now, I gotta ask, since when is SS and medicare "funded"? By all reports, they are both going broke. So I disagree that they are funded by payroll taxes, they are a black hole of fraud and waste that is showing no sign of recovering.

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

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