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 government doesn't make anything, so any government spending is a financial loss to our GDP.

iVillage Member
Registered: 03-02-2009

What are you referring to with "Government Spending accounts for 38% of our GDP"? That's a little confusing because there is no product made by the government, it actually sucks productivity out of the private sector.

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

iVillage Member
Registered: 03-03-2009

You might want to clarify that your sweeping statement is one of opinion and not incontrovertible fact. Government spending on infrastructure makes it possible for private enterprise, at all levels, to prosper. Government contracts can lead to other jobs (called multipliers) which are in support of projects.

I have often wondered if people realize just what the impact of NO government spending would be. No military industrial complex.

Jabberwocka

iVillage Member
Registered: 03-02-2009

You know, it's not like the federal government dropped down

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

iVillage Member
Registered: 12-28-2009

"we would be here to serve our precious federal government."

Whoa! That makes no sense at all. Care to clarify?

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

"we would be here to serve our precious federal government."

Whoa! That makes no sense at all. Care to clarify?

Clarify what? It's already pretty clear.

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

iVillage Member
Registered: 03-03-2009
That's interesting. Not very logical or accurate, but interesting.

I had NEVER before heard that "States gave life to the federal government". However, it does smack faintly of what one might have heard during the Civil War era. Do clarify (much too early to stop!) how you reckon that it (the federal government) is "here to serve us". In what capacity? Through what mechanisms? Why is it ever so much more onerous than state governments? Ever so much more "evil", necessary or not?

As far as "destroying us with debt", we have a system of elected representatives. Do you reckon that any Republican representatives contributed to that debt by waging wars of "pre-emption" while simultaneously cutting taxes and serving very specific special interests? To hear your version, liberals were always, at all times, in control. Kind of selective memory given that Republicans (not conservatives?) controlled the White House, the House of Representatives and the Supreme Court for six long and agonizing years. Forgotten that so soon? Maybe the stop was premature......

Jabberwocka

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

I had NEVER before heard that "States gave life to the federal government".
Wow. now there's a show stopper! Either we are talking about two completely different things or there is a serious education problem that you need to rectify.
...how you reckon that it (the federal government) is "here to serve us". In what capacity?
Lord in heaven, two in a row! Again, something is seriously wrong. Ever

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

iVillage Member
Registered: 09-30-2011

You might want to clarify that your sweeping statement is one of opinion and not incontrovertible fact. Government spending on infrastructure makes it possible for private enterprise, at all levels, to prosper. Government contracts can lead to other jobs (called multipliers) which are in support of projects.

Government

iVillage Member
Registered: 09-30-2011

I had NEVER before heard that "States gave life to the federal government".

You seem to be confused by some "chicken-egg" thing.

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