Posted by tecwrg on 2/28/2013 2:58:00 PM (view original):
Posted by bad_luck on 2/28/2013 2:26:00 PM (view original):So wouldn't cutting the "not so smart" spending be a good thing to do? Or is it your contention that foolish government spending is a good thing for the economy?
Well, let's think about it. We all acknowledge that the deficit is spent by the government and goes into the economy. We all acknowledge that that spending can be wasteful and inefficient.
Where does the deficit come from? Not taxes, or it wouldn't be a deficit. It comes from investors, mostly US, who want a safe place to hold their money. If the government stopped issuing bonds, those investors would put their money in other safe places - CDs, savings accounts, etc. Essentially the money would sit still in an account somewhere earning 1% in interest.
Instead it goes to the government. The government uses it on all kinds of stuff, good and bad - bureaucrat salaries, construction projects, medicare, social safety nets, defense, Amtrak snack subsidies.
Let's say that $200 billion (completely making that number up, but I'm guessing it's high) of the $800 billion deficit is not so smart spending. Cutting that $200 billion still takes $200 billion completely out of the economy.
So yes, right now, foolish government spending is better than no spending by anyone.