Romney: "Cutting Government Spending Would Shrink Economy"

"My job is to get America back on track to have a balanced budget. Now I'm not going to cut $1 trillion in the first year," he said, distancing himself from Mr. Paul's (http://www.washingtontimes.com/blog/inside-politics/2011/oct/19/paul-time-cut-spending/" onclick="window.open(this.href);return false;) plan to slice more than a quarter of the estimated $3.8 trillion being spent by the the federal government.



Why not, someone in the crowd apparently asked, sparking a response from the former Massachusetts governor.



"The reason," he explained, "is taking a trillion dollars out of a $15 trillion economy would cause our economy to shrink [and] would put a lot of people out of work."

Does Romney really not understand basic macroeconomics? Every penny the government spends is taken from the private sector - the engine of the economy. And you guys think this will energize the Republican base.



Full quote here: http://www.washingtontimes.com/blog/inside-politics/2012/may/7/romney-rejects-ron-paul-style-austerity/" onclick="window.open(this.href);return false;

jvquarterback wrote:

"My job is to get America back on track to have a balanced budget. Now I'm not going to cut $1 trillion in the first year," he said, distancing himself from Mr. Paul's (http://www.washingtontimes.com/blog/inside-politics/2011/oct/19/paul-time-cut-spending/" onclick="window.open(this.href);return false;) plan to slice more than a quarter of the estimated $3.8 trillion being spent by the the federal government.



Why not, someone in the crowd apparently asked, sparking a response from the former Massachusetts governor.



"The reason," he explained, "is taking a trillion dollars out of a $15 trillion economy would cause our economy to shrink [and] would put a lot of people out of work."

Does Romney really not understand basic macroeconomics? Every penny the government spends is taken from the private sector - the engine of the economy. And you guys think this will energize the Republican base.



Full quote here: http://www.washingtontimes.com/blog/inside-politics/2012/may/7/romney-rejects-ron-paul-style-austerity/" onclick="window.open(this.href);return false;

Nope he has no clue about macroeconomics... that's why I tried voting for jvquarterback in my state's primary... unfortunately you did not show up on the California ballot (Curses!)

Whether you like gov't spending or not, there are people who actually and fully depend on the gov't for their livelihood. Cutting $1T from the budget immediately isn't going to help those people.



Romney is well on record to grow America out of the financial problems we are facinig.



And his statement is correct. Even though we are borrowing much money, it is still in the economy. There are still government workers who would lose jobs if we immediately implemented the policies Paul is advocating and the safety nets there to help our fellow Americans in times of need (like having your job pulled out from underneath you) wouldn't be there.



It's not Romney who doesn't understand macroeconomics. It's Paul.



He doesn't understand how things are inter-releated and inter-dependent. Much like his foreign policy stances. Things in this world don't just happen in a vacuum. You can't just pull out of the world or the government largesse without severe consequences.



It's Paul who is misguided not Romney.

You guys obviously haven't read Paul's plan so I'll cut you some slack. But find one government job that is immediately cut in it and I'll give you a sticker.



Are you really agreeing with Romney that cutting government spending would shrink the economy? I guess you'd just ignore all the data at the end of WWII that suggest the exact opposite. Romney is a Big Government guy. That's all there is to it. So don't come crying with the anti-Mormon garbage when the real reason Republican's don't like him is he isn't a fiscal conservative.

And you obviously haven't read Romney's plan.



You can't just return to WWII spending levels tomorrow. That would be catastrophic. And I'll take the word of an economist over that of a doctor who hasn't practiced in 30 years, because he's been part of the problem in Washington.

Actually I have read Romney's plan or outline or whatever he is calling it these days.



You are mistaking what I am saying re: WWII. At the end of WWII US government spending decreased by 40%. Did the economy implode? Ron Paul's plan mirrors the decreased spending at the end of WWII. Ask your economist if his model would have correctly predicted the growth that occurred with decreased spending at the end of WWII. At the time all the big government types were coming out with their doomsday predictions the same way Romney is now. But it was the decreased government spending that finally ended the depression. It will require the same decreased spending to right the ship now. Just don't expect it from Romney.



And don't expect most Republicans to fall in line behind a guy who turns his back on the small government principles Republicans say they believe in.

SpiffCoug wrote:
And I'll take the word of an economist over that of a doctor who hasn't practiced in 30 years, because he's been part of the problem in Washington.

LOL. Paul, if you haven't noticed, has been one of the few guys in Washington who have tried to put the brakes on government. But voting against anything but a balanced budget and never voting for a tax raise is SOOOOOOO extreme. A vote for Romney at this point is a vote for more of the same solutions that Paul (alone often) has been fighting.



Spiff, if you're going to let economists tell you who to vote for, why not just vote for Obama? He's got plenty of economists backing his policies!

What about his track record of the winter olympics? He turned a deficit into a surplus and it was a good show.

Ron Paul believes the Olympics should be cancelled.

Actually Romney has it right. In a recession, cutting government spending to address the deficit takes money out of the economy in the form of cut jobs, reduced payments, etc. Fire 100,000 teachers and eliminate and cut, for example, transportation spending and you have fewer jobs less productivity and an even worse economy. When you are running deficits cutting spending does not put tax dollars back in taxpayer pockets. This is not esoteric stuff

BoiseBYU wrote:
Actually Romney has it right. In a recession, cutting government spending to address the deficit takes money out of the economy in the form of cut jobs, reduced payments, etc. Fire 100,000 teachers and eliminate and cut, for example, transportation spending and you have fewer jobs less productivity and an even worse economy. When you are running deficits cutting spending does not put tax dollars back in taxpayer pockets. This is not esoteric stuff

False.



In both cases (teachers and government funded transportation) you mention the free market would take over and the economy would thrive. I have two case studies for you to review. Decreased government spending at the end of WWII and during the recession of 1921. Review and report. Then see if you still believe what you wrote above.

scott715 wrote:
What about his track record of the winter olympics? He turned a deficit into a surplus and it was a good show.

I think Romney is excellent on microeconomics. If I wanted to turn around a single failing business I'd give him a call. I doubt he'd recommend deficit spending for my company though.

jvquarterback wrote:

Actually Romney has it right. In a recession, cutting government spending to address the deficit takes money out of the economy in the form of cut jobs, reduced payments, etc. Fire 100,000 teachers and eliminate and cut, for example, transportation spending and you have fewer jobs less productivity and an even worse economy. When you are running deficits cutting spending does not put tax dollars back in taxpayer pockets. This is not esoteric stuff

False.



In both cases (teachers and government funded transportation) you mention the free market would take over and the economy would thrive. I have two case studies for you to review. Decreased government spending at the end of WWII and during the recession of 1921. Review and report. Then see if you still believe what you wrote above.[/quote



Please read what I said and do not restate what I didn't. I did NOT say that the economy would thrive if we did not cut govt spending. What I DID say is that in times of recession and deficits, cutting governement spending does not necessarily put dollars back in the taxpayers pockets. I think it might also dampen the economy because now there are even fewer jobs. Further, cutting spending may not reduce the deficit because if more people are out of work, there is more govt payments to cover unemployment and welfare and less revenue to pay for them. I understood your point to be that reduced govt spending puts more dollars in the taxpayers pockets and this leads to more economic activity. That does not make sense where all you are doing is reducing some the already existing deficit for the year. Now all this said, I am a big believer in bringing government spending more in line with revenue. We are on an unstainable course. But draconian cuts now would not lead to economic prosperity....

You are still falling into the Keynesian trap. Any government outlays (including deficit spending) do nothing more than mis-allocate capital from the proper (free market) determined ends. Fewer jobs in non-productive sectors means more jobs in productive sectors. Which in turn leads to a more robust economy rather than a bubble economy. This is the problem with all government spending.

jvquarterback wrote:
Fewer jobs in non-productive sectors means more jobs in productive sectors. Which in turn leads to a more robust economy rather than a bubble economy. This is the problem with all government spending.

This is incorrect. Fewer jobs in non-productive sectors does NOT mean more jobs in other sectors. It simply means fewer jobs in non-productive sectors. Economics is NOT a zero-sum game. Taking money out of the government doesn't automatically put that money back into the economy - especially when the money being taken out was money the government didn't have and the economy hadn't made enough to put that much into the coffers anyways.



If I planned on spending/budgeting $500, but only brought in $300, so I then reduce my budget to $300, I don't know automagically have $200 more. I still only have $300.



You're premises are false.

If you cut it all at once, you obviously are going to shrink the economy in the short term. You honestly believe that if you cut government spending by $3.8T that the private sector will pick up the slack the very next day?



Long-term, I agree with your premise, but short-term Romney is right. I read his plan about addressing both short- and long-term economic integrity, where your contrarian argument pretends the short-term doesn't exist.

Your are correct it is not a zero sum game.



In your scenario the $200 deficit spending is diluting the value you actually have. You are mis-allocating 40% of your property in less productive efforts. If you concentrated your efforts correctly without the wasteful spending you would be better off. Rather than appropriating $300 to your most productive efforts you are only using $180. You've made yourself poorer. This is the definition of a bubble economy.



The non-productive workers will be as productive as they can. You are correct again when you say unemployment and welfare impede production.

jvquarterback wrote:
You are still falling into the Keynesian trap. Any government outlays (including deficit spending) do nothing more than mis-allocate capital from the proper (free market) determined ends. Fewer jobs in non-productive sectors means more jobs in productive sectors. Which in turn leads to a more robust economy rather than a bubble economy. This is the problem with all government spending.

Let's agree to disagree. I don't think I'm falling anywhere. In my view, fewer jobs in nonproductive sectors (whatever that means but I assume you mean a govt employee) does not mean more productive jobs (whatever that means but I assume you mean private employment) One does not necessarily follow from the other. Some functions of govt. allow for greater productivity--education and security come to mind--but they do cost dollars. I am not aware how govt spending causes bubbles. Could but a number of bubbles over the decades had little to do with govt spending and lots to do with greed.

snoscythe wrote:
If you cut it all at once, you obviously are going to shrink the economy in the short term. You honestly believe that if you cut government spending by $3.8T that the private sector will pick up the slack the very next day?



Long-term, I agree with your premise, but short-term Romney is right. I read his plan about addressing both short- and long-term economic integrity, where your contrarian argument pretends the short-term doesn't exist.

Yes. If the government cut spending by $3.8T the private sector would pick up the slack very quickly beginning the next day. Of course Paul's plan only calls for a $1T decrease with no immediate cuts to any jobs (they are lost through attrition in his plan).



I've provided the evidence of the only two times in the 20th century when the US government actually decreased spending. On both occasions I'm sure there were people who were out of work for a time. In both cases the economy improved very quickly, far more quickly than any time people proposed only decreases in the the rate of future spending (as Romney's plan does).

BoiseBYU wrote:

You are still falling into the Keynesian trap. Any government outlays (including deficit spending) do nothing more than mis-allocate capital from the proper (free market) determined ends. Fewer jobs in non-productive sectors means more jobs in productive sectors. Which in turn leads to a more robust economy rather than a bubble economy. This is the problem with all government spending.

Let's agree to disagree. I don't think I'm falling anywhere. In my view, fewer jobs in nonproductive sectors (whatever that means but I assume you mean a govt employee) does not mean more productive jobs (whatever that means but I assume you mean private employment) One does not necessarily follow from the other. Some functions of govt. allow for greater productivity--education and security come to mind--but they do cost dollars. I am not aware how govt spending causes bubbles. Could but a number of bubbles over the decades had little to do with govt spending and lots to do with greed.

Free market driven education improves productivity. The disaster the federal and state governments call education does very little to improve productivity.



Name a bubble in the last 100 years and you can bet the government inflamed it even if they didn't start it.