Latest GOP idea of linking debt to GDP.

[Democrats_win]

All over TV: GOP robots saying that we must link the national debt and/or the budget deficit SPENDING to a percentage of the GDP. The reason this is a bad idea is that when the economy falters, and the GDP declines, the government can't "prime the pump" to get the economy going again. Worse, when the economy gets moving, the GDP grows and government spending will increase thus causing the economy to overheat.

The government's fiscal policy of spending during recessions and letting up during booms is called "counter-cyclic." The illogical policy proposed by the GOP makes me wonder if the GOP is just desperate for a political victory during the run up to the debt-ceiling vote.

[DJ13]

1. The economy is teetering on the brink of a real depression

Now is the perfect time to cut spending.......

:nuke:

[golfguru]

5. Depression

is like a festering sore. You can't just cover it up with band-aids.
All the puss in the sore must be squeezed out. Sure it hurts bad
for a few minutes, but that is far better than ongoing pain.

With 14.3 Trillion in debt and 1.6 Trillion yearly deficits, if they
continue to borrow more money to prime the pump, the result will be
far worse than just a severe recession.

[DJ13]

6. Really?

You mean WWII wasnt the largest government expenditure in history, which was the only thing that ended the last depression?

[golfguru]

7. In WWII country was not $14.3 TRILLION in hock

different times, different economy. Foreigners did not
own our debt. The industrial giants of the WWII era (Japan
& Germany & UK) had their factories flattened. We were the only
manufacturer of any size left in the entire world. And we
had no competition from China or India which now can manufacture
anything we can at a fraction of the cost here.

Like I said different time, different economy.

[Warren Stupidity]

2. obviously that is what they want

a repeat collapse with a mandatory pro-cyclic federal spending policy to augment the downturn. The real question is why? Why do they hate America so much?

[orangeapple]

3. the economy isn't a 'pump' to be primed

It is innumerable individual decisions between production and consumption, that must ultimately balance in favor of production exceeding consumption for wealth to grow. Government directed 'pumping' up of consumption only exacerbates the lack of real savings that a recession simply reveals (not causes).

It needs to be acknowledged by the 'pump priming' crowd that Federal spending is higher than anytime since WW2 as a percentage of the economy, and yet we're recovering jobs more slowly than any recession since WW2.

The 'pump priming' metaphor has no basis in theory or reality.

The common sense of a mere generation ago that you can't consume more than your produce is ridiculed as a preposterous 'austerity' that brings with it the seeds of doom, when the fact is the ever growing levels of debt are what are really choking off the future.

[golfguru]

4. The government is more broke than most corporations

They are not in a position to prime the pump any more.
Those days are long gone my friend. Just watch events as they
unfold in Greece, then Portugal, then Spain & Ireland. Learn
from actual history, not ivy tower theoreticians.