Reducing Spending Now: The Key to Growth, Not Austerity
Posted by freedomforall 4 days, 12 hours ago to Economics
Excerpt:
"Imagine a future where the average American earns $15,000 more each year because Congress reduced federal spending and national debt. Too often, spending cuts are painted as a necessary evil—painful austerity measures that slow the economy. This narrative couldn’t be further from the truth. Economic research shows that stabilizing government debt by cutting spending can unleash economic growth.
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Economic research reinforces the idea that spending cuts can enhance growth. A 2020 study by researchers at the Hoover Institution found that stabilizing and reducing the debt by restraining the growth in federal spending could boost short-run annual GDP growth by 10 percent and long-run growth by 7 percent. More specifically, Cogan, Hail, and Taylor find that an economic plan that curbs entitlement spending without raising taxes can deliver a powerful one-two punch for growth. A credible commitment to reducing future debt and taxes results in higher long-term disposable income for individuals, motivating more consumer spending today. This surge in consumption more than offsets the initial reduction in entitlement benefits, demonstrating that fiscal discipline can create a win-win for the economy."
"Imagine a future where the average American earns $15,000 more each year because Congress reduced federal spending and national debt. Too often, spending cuts are painted as a necessary evil—painful austerity measures that slow the economy. This narrative couldn’t be further from the truth. Economic research shows that stabilizing government debt by cutting spending can unleash economic growth.
...
Economic research reinforces the idea that spending cuts can enhance growth. A 2020 study by researchers at the Hoover Institution found that stabilizing and reducing the debt by restraining the growth in federal spending could boost short-run annual GDP growth by 10 percent and long-run growth by 7 percent. More specifically, Cogan, Hail, and Taylor find that an economic plan that curbs entitlement spending without raising taxes can deliver a powerful one-two punch for growth. A credible commitment to reducing future debt and taxes results in higher long-term disposable income for individuals, motivating more consumer spending today. This surge in consumption more than offsets the initial reduction in entitlement benefits, demonstrating that fiscal discipline can create a win-win for the economy."
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