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Anything above zero is debt adding to the GDP. For example, the "1" on the vertical scale represents $1 of GDP added for every dollar of debt.
Anything below "1" is wasted money in that you get less GDP out than the dollar that was put in. The last time GDP increased at all was around 1980 in the middle of the chart.
Not according to NIPA. When I took my concerns of artificial growth due to massive government spending to my macro economist teacher, he jumped out of his chair and heralded that we are back at the steady state. That was over two years ago.
Unless you are Austrian or outside the mainstream, economists will pound into your head that increasing government expenditure will bring economic growth. In fact, it is built into their calculation of GDP: Y = C + I + G.
So why not pass a law that says it can only be 18%? Not as if politicians think the laws they pass actually pertain to them, but I can dream can't I.
His idea that government should increase spending based on gdp calculations is bogus.
For instance, if we were to eliminate the income tax which is roughly around half of the governments revenues, we would have to go back to a government of the the early-to-mid 1990's.
Cutting government in half is not a radical idea. Plus, real growth comes from production, not government expenditure.
So why not pass a law that says it can only be 18%? Not as if politicians think the laws they pass actually pertain to them, but I can dream can't I.
You would have to go back to 1966 for the last time when it was under 18%. So, if 18% is the benchmark you want to maintain for government spending, guess what... the tax revenue would have to be over $2.6 Trillion dollars for a balanced budget. When was the last time we were there?
Quote:
Originally Posted by Rggr
Nothing, but this time it came with hope and change.
I think you read way too much into it, well beyond the intended application.
Quote:
Originally Posted by evilnewbie
Larger debts... and also the fact that it didn't solve anything... Trillions of dollars of debt... for what? What was the gain?
Even if the country maintained its spending at 2001 level, we would have a debt today. Why?
Government spending has been between 20% and 25% of the GDP since 1975. Whats new?
The fact that government receipts are below that and have been accumulating for 30 years to $14.3 trillion in debt.
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