Sunday, May 9, 2010

Did you remember the Great Depression? How about WW2?

The Foundry's Kathryn Nix correctly pointed out on Friday that Obama is spending at levels never seen since World War II. She goes on to claim that Obama is going against public opinion in doing so. Lets not take these numbers out of context. In 1945, America had just pulled itself out of one of the most severe economic slump in American history and won one of the most costly wars it ever involved itself in. The spike in government spending was due to a combination of economic relief programs and military expenditures. That was then.

What has changed now? We are going through the Great Recession, fighting wars in Iraq and Afghanistan, and are feeling the effects of an restructured economy. As business activity is down, the GDP shrinks, and public spending for the unemployed rises. This leads to government spending taking up a considerably larger percent of GDP than it would otherwise. Yes, the stimulus bill and TARP did not help, but that's because nobody wanted to raise taxes to do so. Which is what you wanted right? I'm not saying the level of debt we have is acceptable, I'm only hoping people will look at the whole picture when it comes to GDP spending.

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