C. Sokolowski wrote:
"Is not it the case that much of the deficit is due to tax cut rather than spending? Unlike gov't spending, which actually results in the production of tangible goods, hence creates jobs, tax cuts are mainly used to refinance the existing debt, so their effect on job creation is not what the Bush gang advertises. Ergo: the right question to ask is what the effects of the deficit would be had the Bush gang increased public investment instead of reducing public revenue?"
First, I think the Bush administration has sharply increased government spending. Second, I think it's not true to say that government spending necessarily results in the production of tangible goods. Finally, it is also true that tax cuts add to private sector liquidity which can and probably does result in higher consumption and investment, if only by adding to total leverage in the economy.
My second question was about what could have been accomplished had the money been spent a different way. But what I was mainly wondering is where the economy might be *without* all this deficit spending. Doug Henwood says "in the soup" and I'm sure that's a technical term, but I was hoping for some ideas about what the actual numbers might be.
peace,
boddi