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The Truth About Economic Growth

Business Insider put together an interesting chart showing GDP minus government spending. In other words, it shows economic growth coming from the private sector (not from stimulus spending):

The shaded part is the recession, where by early 2009 (when Obama took office) the economy was shrinking by 7.5%. But less than a year later, the (private sector) economy was growing again by 5%, which is not bad.

The problem is that as stimulus spending stops, those jobs go away, and the private sector is not creating enough jobs to replace them. It is pretty clear that the stimulus did its part of the job — stimulating the economy to get it going again, but unless the private sector does its part and starts hiring again we could risk a renewed recession, especially since the Republicans are trying to drastically cut government spending even more.

It is frustrating that the Republicans claim to be so concerned about deficits now, even though during the Bush administration they had no problems voting for unfunded entitlement programs like Medicare Part D, and starting two wars while simultaneously cutting taxes for the rich. I can’t think of an explanation for their behavior other than they want the economy to suffer.


One Comment

  1. Arthanyel wrote:

    They don’t want the economy to suffer. They want to “starve the beast” and implement the Grover Norquist conservative downsizing of government by forcing revenues to be less than 15% of GDP (done), create a debt and deficit criss (done) to force cutting social programs they don’t like (well on the road to getting done, at least in part).

    And read up on that plan – once this phase ends and they get the cuts they want, they will then go back and CUT TAXES AGAIN to get the total revenue percentage of GDP to their next target (12%) and trigger another crisis to force another round of cuts, and then do it again. Their ultimate goal is revenue at or below 9% of GDP which would basically only allow us to pay for defense and support for industries they like.

    We have to stop them here. Paraphrasing the line from Air Force One went, don’t give the elephant’s a cookie, because if we do they will also demand a glass of milk.

    Thursday, July 21, 2011 at 12:38 pm | Permalink