God deficit spending works. Its like when you make and slend 40,000 a year and you get a credit card with a 5k limit and you max it out. Your expendatures go up 5k over last year.
Now if you build dams and the like or win a war, great. Or get an education on a loan. SOMETHING that will help the nation earn money at a rate higher than the interest on the debt grows.
How was the Reagan deficit spending different than Bush's or Obama's or FDR's? They all pumped the economy for a short term gain.
Note: I've been reading and writing about the economic policies of the FDR Administration for years, so the facts and numbers are ingrained in my head. Verify them for yourself. I'll do a search for pertinent links if you like, but this way we avoid the issue of bias. Check it out for yourself. I assure you, the following will hold up, though you might find sources that differ with my numbers a percentage or two here and there. However, you could start with the UCLA study.
See also:
http://www.usmessageboard.com/posts/9691134/
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First, neither the Reagan nor the Bush Administration asserted the spending of demand-side economics, which is what you're unwittingly talking about.
FDR's infrastructural projects, despite the historical legend, were relatively sparse and sporadic, netting no discernible benefit, as compared to the impact of the across-the-board spending of WWII, which did finally pull the economy out of the Depression, albeit, coupled with another indispensable factor, which I'll touch on momentarily.
The "antitrust suspension-collective bargaining policy" of the National Industrial Recovery Act (NIRA), which artificially inflated consumer prices and wages for years on average by as much as 23% to 25%, not surprising, dealt a second blow to the GDP, which at one point was roughly 27% below what it should have been. That's a killer number. Even wholesale prices were artificially inflated by nearly 15%. Naturally, unemployment remained staggeringly high throughout FDR's presidency before the war. In fact, unemployment in those industries targeted by the NIRA was nearly 25% higher than what it should have been for years, and don't get me started on FDR's demand-side agricultural policies, which were especially irrational given all the out-of-work in soup lines.
Bottom line: FDR's policies prolonged the Depression for seven to ten years, depending on the estimation of how long the recession, turned into a Great Depression, should have actually been as routinely based on the economy's response to the supply-side policies of the Harding Administration in the face of the recession of 1920.
It was war-time spending on a much grander scale across the board that got the economy moving in the right direction again. So, yes, one can argue that demand-side spending works to stimulate the economy, but what person in his mind would want to be at war on that scale all the time when supply-side economics works
all the time, between cyclical corrections, without such spending and mayhem? Moreover, even that doesn't work beyond the short term if the demand-side policies of wage-and-price controls are simultaneously applied.
Though the FDR Administration continued to look the other way for nearly five years after the Court struck down the anti-competition policies of the NIRA, the Justice Department was finally compelled to enforce antitrust law when the government discovered that it couldn't afford to fight the war paying wholesale prices artificially inflated by nearly 15% or more depending on the industry. Hence, enforcement was dramatically increased after years of collusion, and the economy shifted into an even higher gear.
As artificially inflated prices of goods and services returned to rational levels, organized labor was struck a major blow for sue, but then it could no longer monopolize the surplus value of production at the expense of everyone else in need of a job in a GDP-stalled economy. Demand for goods and services grew as prices and unemployment plummeted. Production increased, i.e. supply increased to meet the new demand. Thus, GDP, shackled and rooming in the basement for years, dramatically improved.
Look here. Lose the deficit-charts economics your operating under. Deficit spending and the spending of demand-side economics, let alone as coupled with demand-side wages-and-price controls, are not necessarily the same thing. Deficit spending is borrowed spending that must eventually be paid back with interest! The spending of demand-side economics can be drawn from surpluses, though on the relatively puny scale it would necessarily be in that case would amount to squandered spending. Instead, give those surpluses back to the people to affect the supply-and-demand dynamics of the real economy: now you've got something.
Once again, the supply-side economics of the Reagan Administration and the demand-side spending of FDR and Obama are not the same thing, and in spite of your claim, FDR's and Obama's Keynesianism did not benefit the economy, short-term or otherwise.
The truth of the matter is that you cannot truthfully point to any period in recent history where demand-side spending has ever had any significant impact on the economy other than the vast, across-the-board spending of WWII or, arguably, that of the Eisenhower interstate highway system. Only when it goes toward the production of durable goods across the board or to enduring, universally beneficial infrastructure does it have a discernibly positive impact.
