CHART: The Gobsmacking Drop In Government Spending Under Obama

[Bucky]

1. This economy is what you get with austerity during a recession.

I teach economics. Social scientists have known government spending is a major component of GDP for over a hundred years now. There's no excuse for this surprising anybody. If you cut government spending, you will automatically reduce GDP unless you offset that with private sector growth. However there's been about zero effort to grow the private sector since the 1990s (other than trade agreements).

Another major component of GDP is private investment in the economy. Unfortunately, we don't have a tax structure to encourage private investment at higher than current rates--it makes as much sense to a potential capitalist to put his money in bonds or in India when you don't have a government policy of driving real growth.

The fact that we're in a sluggish recovery rather than an all-out recession speaks to the core strengths of the American economy. We could be doing one hell of a lot better if we'd incentivize investment instead of just handing out tax cuts and singing "Please do something nice for us all, Mr Billionaire." Failing that, we could spend & borrow just like Reagan did. That's how we grew the economy in the 80s.

Sadly, we have two political parties that bank their power aspirations on encouraging economic ignorance among the voting public.