Reality Check on "Dramatically Reducing Govt Spending"

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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: 05-13-2009
You are history? Good to know. You might want to edit that...

Yes things have gone up. How do you justify that the US spends 6x more than any other cow try?

Actually ss is not going broke and minor adjustments could keep it solvent for years to come. Medicare on the other hand, Medicare is subject to huge health cost inflation that has little to do with fraud and waste.

Do you have health insurance? How does your insurance company control costs? Mine went to a self insurance model, e.g single payer and saved tons.
iVillage Member
Registered: 03-02-2009

chestnuthooligan wrote:
You are history? Good to know. You might want to edit that...

Really not going to bother. It's not worth the effort on this crappy web site.

Yes things have gone up. How do you justify that the US spends 6x more than any other cow try?

Talk about need for an edit!

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

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Registered: 02-15-2007

iVillage Member
Registered: 12-29-2011

If we believe that article then only one question remains. How much do we have to spend until we all become wealthy?

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Registered: 02-15-2007

iVillage Member
Registered: 12-29-2011

Hi Tom,

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Registered: 02-15-2007

iVillage Member
Registered: 12-29-2011

Hi Ton,

I agree with much of what you wrote. I would point out that the current recession is not a cyclical one.

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Registered: 02-15-2007

iVillage Member
Registered: 03-02-2009

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

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