Kurt_and_Hunter
If this years budget deficit was 3.6 trillion but led to 8% growth...
The current deficit is $1.6 trillion (I think... that's from memory of the news)
US economic growth going forward is expected to be in the 3% range for a long time and unemployment expected to be high (7.5%+) for years.
Okay, a hypothetical...
If this year's budget added $2 trillion in job creation and economic stimulus and the result was GDP growth of 8% in 2011 and 6% in 2012 and some points cut off unemployment how would that affect the deficit and debt in 2014? How about in 2018?
Government revenues are dynamic, not static. In practice GDP is a greater driver of revenue than abstract tax rates. (Repealing the bush tax cuts will generate a hell of a lot more revenue in an environment where people are working and spending and booking profits.)
My instinct is that a stimulus blow-out this year would not make the long-term deficit and debt much worse and would stand a real chance of reducing deficit and debt in the long term, and perhaps even in the medium time-frame.
I'd love to answer this, but I don't have time to write an essay, and that would be what it would take to correct all the errors this primtive presented.
Briefly, adding $2T in "stimulus" for one year, even if GDP went to 8% for that one year, would not cause it to be at 6% the next. It's a one year shot in the arm, and without additional "stimulus" the next year, you're not going to sustain the growth.
Com'n primitives, this is straight-up Keynesian economics. The model says you keep pumping in money year after year after year until things turn around, and then you ride out the inflation on the other side. So in your example, a one time shot would not sustain growth, and by 2014 & 2018 you'd have limited growth with double the debt.
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