Saturday, July 16, 2011

Why Obama Can't Allow Spending Cuts

GDP is an ugly animal. It's an equation designed specifically to support the Keynesian theory that consumer and government spending drive the economy -- that's why business-to-business spending (which is larger than consumer expenditures) is excluded. It's claimed that to include it would be "double-counting", which is false.

So, here's Mr. Obama a year and a half or so before the presidential election and the economy is showing all signs of sinking back into recession. Now, the President and his administration may not know much about economics, but they do know that increased government spending over the next year just might be enough to keep the GDP statistic above water.

It wouldn't be much to crow about, but it would save him the humiliation of an officially declared recession. Now, you and I understand full well that more government spending will not hire the unemployed and won't re-open closed businesses. But when you hear Obama and his apple-polishers screaming that cutting government will harm the economy, just substitute the word "GDP" for economy and you'll know why they're so desperate.

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