Don’t you have to at least mention that WWII was a major factor in this? It wasn’t just government spending on roads and schools. It was a war.

This goes back to the original post:
-Tax multiplier = (Delta in taxes * -MPC) / (1 – MPC)
-Government spending multiplier = (Delta in government spending) / (1 – MPC)
-mpc = marginal propensity to consume
-If you set MPC to .7 and decrease taxes by $30,000,000 … output goes up to $70,000,000
-If you set MPC to .7 and take that same $30,000,000 and put it into government spending… output goes up to $100,000,000″ (The MPC has been set at .7 to account for easy math)

And just because he is increasing government spending doesn’t mean it will be a boom economy.

I said “Whether or not you agree how they are spending the money, you must first come to realize that the money should be spent.” Once you realize that the math fully supports the fact, then we can move on to more constructive discussions along the lines of: What should the money be spent on?

IMO, it needs to be invested in public goods that have a return on investment. The highways and bridges are in disrepair. Third-world nations are surpassing our technology infrastructure. These are all BIG problems that we need to focus on. And are those not two things that made our economy take leaps ahead of other countries? Public goods have a huge impact on private industry.

Too often people who are in favor or government spending are improperly labeled as wanting people to get on the government teet. That is not the case, at all. But then again, those same people usually don’t blink twice at corporate welfare. So, what can you do?

The funny thing is, unlike some people I have talked to, I actually change my opinion based on the circumstances. If you had asked me in 1995 if I was in favor of high government spending I would of said heck no!

Rocket — What do you think would be BENEFICIAL government spending? Please note: No one here is arguing that the government spending money should be handed out. Obama is doing that with some of the money, and that is unfortunate, but that does not change the argument that government spending (when done properly) is beneficial for an economy that is in a recession or depression.

First, Congress controls the purse strings – Reagan dealt with a high spending Dem congress. Clinton had a low spending GOP congress.

Why didn’t you include more presidents?

Clinton inherited a recession from Bush 41, yet you are showing a low amount of spending during his presidency. Doesn’t that throw off your formula? How did we get out of that recession without an increase in Government spending?

Interesting that you left Kennedy off – he was a Dem who believed that government should cut taxes to grow the economy.

You are also showing a high rate of government spending for Johnson, Nixon and Ford – shouldn’t that mean that the 70′s and early 80′s were great economies?

The graph should be tied to who controlled Congress.

The graph does not include allowances for war spending.

rocketc’s last blog post..Ronald Reagan on National Healthcare

First, Congress controls the purse strings – Reagan dealt with a high spending Dem congress. Clinton had a low spending GOP congress.

Why didn’t you include more presidents?

Clinton inherited a recession from Bush 41, yet you are showing a low amount of spending during his presidency. Doesn’t that throw off your formula? How did we get out of that recession without an increase in Government spending?

Interesting that you left Kennedy off – he was a Dem who believed that government should cut taxes to grow the economy.

You are also showing a high rate of government spending for Johnson, Nixon and Ford – shouldn’t that mean that the 70′s and early 80′s were great economies?

rocketc’s last blog post..Ronald Reagan on National Healthcare

“If you can answer me how we can stabilize or increase GDP when C and I are down, then we can move forward in this conversation. If you come off with some political rhetoric, then this conversation is a lost cause.”

Because government does not really produce a product and it can only pay people money that it has either taken from current tax payers or borrowed from future tax payers.There are some easy ways to increase consumption and investment without increasing government spending:

Cut capital gains taxes = increase in investment
Cut corporate taxes = increase in employment
Cut social security taxes = increase in savings
Cut gasoline tax = increase in gasoline purchases
Cut property tax = increase in property investment
Cut sales tax = increase in sales
Cut income tax = increase in spending and savings and employment

Your formula is about to get a huge test over the next few years. If you are correct, we should now be entering one of the greatest boom economies that our nation has ever seen. Our government is printing and spending money like never before. President Obama is proposing to quadruple the record sized deficit that President Bush carried in 2008.

If your formula is right – let the good times roll!

rocketc’s last blog post..Ronald Reagan on National Healthcare

These arguments are silly because we are merely arguing that one side of the same coin is better.

The simple truth is this: Any politicians who have voted to run a deficit during good economic times are idiots. When the economy is good government spending needs to go down. Any politician who has voted to cut spending now is an even bigger idiot. When consumption and investment are down, it is the most important time to increase government spending.

Whether or not you agree how they are spending the money, you must first come to realize that the money should be spent. You seem to not understand that basic tenet of economics. GDP = C + I + G + (X-I).

If you can answer me how we can stabilize or increase GDP when C and I are down, then we can move forward in this conversation. If you come off with some political rhetoric, then this conversation is a lost cause.

MLR

Don’t you have to at least mention that WWII was a major factor in this? It wasn’t just government spending on roads and schools. It was a war.

rocketc’s last blog post..Ronald Reagan on National Healthcare

[...] Life ROI disagrees with me about government spending. I still do not think that government spending is ever efficient . . . [...]