Why is consumer spending good, but government spending bad?
As the USA closes in on it’s next totally manufactured economic crisis, the sequester, it seems timely to look at the assumptions driving Republicans to go over the cliff. At its most fundamental level, the key assumption is that all government spending is BAD. Everything would run smooth as a clock if we eliminated it all, and cut taxes to zero. What we can’t even possibly consider ever doing is tax enough to actually pay for spending levels anywhere close to today’s.
But why should that be? Isn’t money fungible? Sure, government spending has to come from the people. So where does the money come from when consumers or businesses go out and spend? It’s not magic money which comes down from heaven like manna, or grows on trees in our back yards, is it? So why would it create thousands of jobs if UPS places an order for 1,000 delivery trucks, but destroy thousands of jobs if the USPS orders exactly the same number of trucks form exactly the same manufacturer? What kind of sense does such magical money thinking make?
Why does the GOP insist that all government spending hurts the economy and costs jobs except defense spending, which magically creates jobs. But hey, we are dealing with people who, having government jobs themselves, insist that government cannot possibly create even one job. So maybe I’m expecting a little much when I expect to find some basis in sense in political rhetoric. I guess what I do find mystifying is that there is such a large crowd ready to believe magic money will drive a wild recovery if we only cut spending.