How Federal Spending Hurts The Economy?

@gewcew23 (8007)
United States
November 4, 2009 12:01pm CST
Keynesian economist say that the economy needs to be primed with Federal spending, yet this has never been shown to have worked. Take for instance the years from 1995 to the end of 2000, which I think we can all agree were very good economic years, the Federal budget went from 1.6 trillion dollars for the 96 Federal fiscal budget to 1.9 trillion dollars for the 01 Federal fiscal budget. Doing the math that was an increase of 300 billion dollars over six years. The years of 03 to 08 were not exactly the best of economic year, I think we can all agree with that. During those years the Federal budget went from 2.3 trillion dollars for the 04 Federal fiscal budget to 3.1 trillion dollar for the 09 Federal fiscal budget. Doing the math that is an increase of 800 billion dollars over six years. So to but it all together when the economy of the late 90's Federal spending only went up 300 billion over six years compared to the economy of the mid 00's federal spending went up by 800 billion dollars. Using Keynesian logic the mid 00's should have been just as good as the late 90's or even better. Why does not Keynesian prime the pump theory work because to improve the economy, government has to take money out of the economy. Even if governments borrow to prime the pump they must take money out of the market that could be used to make loans to businesses.
1 response
@Destiny007 (5805)
• United States
5 Nov 09
Keynesian Economics has been thoroughly debunked. You cannot spend your way out of a recession or debt. The government does not produce wealth or anything else... the government takes wealth and productivity in the way of taxes and over regulation. Federal spending hurts the economy... and deficit spending will destroy it. Reaganomics was... and still is... the correct economic plan. We need to return to that philosophy immediately, and should never have abandoned it in the first place.
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