The classic response is that the only time deficit spending is agreeable is to tide over a depression. Of course, if you aren't already running a deficit, this is much easier to accomplish...

If you decide to infuse cash... the logical place is to invest in infrastructure. Replace some of that decaying infrastructure in the US.

Social programs are difficult to substantially cut, although they could be reordered/reformed.

Most everything else could be cut in principle. Obviously it's also possible to over-do it with short-sighted, fiscally irresponsible cuts.

Spend on building the infrastructure for an economy that is not oil dependent.
Wind power, the transmission and storage capacity to make it work, high speed rail to replace shorter air routes, nuclear power in a sensible way.

__________________
“ The subjects of every state ought to contribute towards the support of the government, as nearly as possible, in proportion to their respective abilities; that is, in proportion to the revenue which they respectively enjoy under the protection of the state.”

Adam Smith , The Wealth of Nations 1776

"We have always known that heedless self-interest was bad morals; we know now that it is bad economics"
FDR's second Inaugural Address

Spending on Iraqi infrastructure makes sense, but I don't see the need to strongly tilt it away from oil. They have plenty. To invest in nuclear for the Iraqis seems to be a bad idea, I doubt Isreal would like this at all.

Just in case anyone wants some actual data to base their opinions on, here is an excellent study of what 'stimulus' effect one can expect from various different policy options.

Source

Attached Images

 

__________________
You can visit my forum at www.discussionworldforum.com - new members are always welcome.

Sorry, this isn't Bush's doing. At least not significantly more than all the other crooks we've been sending to DC for the last several decades who've run unnecessary deficits in order to buy votes. And while our government Should be run more like a business, there are some inherent differences in how they operate - So long as we aren't on some sort of commodity standard (gold standard, silver standard, etc), government should have a goal of minimizing debt, but not to the point of having or accumulating significant reserves.


As much as I'm anti-entitlement, slashing welfare and such in a down economy is not the way to go. But I think we're over-simplifying (or over-reacting to) the question. Actually, we have 2 scenarios to look at:

1) This is a temporary downturn. Perhaps worse than others recently, but something that will be resolved in 3 yrs or less without horrific impacts. If this is the case then we should make few if any changes based on our current short-term problems, but instead get our house in order for the longer term - phasing out or revamping welfare, phasing out other ineffective or counter-productive programs, improving infrastructure, finding a way to focus on results-based education that isn't so test-based, balancing the budget, phasing out foreign aid, etc.

2) This really is a meltdown, or at least a Major shake-up. I really don't know. Significant cuts to welfare may result in riots in the streets. Significant cuts to military spending mean you'll have a large increase in one of the most crime-prone demographics, and with individuals with combat training and possibly access to weapons. Significant cuts in other areas like education or infrastructure have potential to cause trickle-down effects like increased unemployment and/or longer term problems. Increased borrowing or printing won't be a viable option if our credit is crapped out. The only obvious cut is foreign aid. I'd seriously look at Retro's recommendation of getting us back on the gold standard or some such.

__________________
Today's forecast: Government corruption.

Tomorrow's forecast: 100% chance of more 'politics as usual'

Maybe it's finally time to vote Libertarian

On the contrary, I think national defense is the highest priority of the federal govt, as its a specifically mentioned duty in the constitution. Keeping people fed is not mentioned anywhere. Of second importance is ensuring freedom and the rights enshrined in the constitution. This would mean the justice system, the congress, president. Pretty much everything else can go.

So, as far as I can tell the increase to GDP is pretty much the figure after the 1 as a percentage, is that right?

Is there anything in the Constitution saying the Govt can do no more than what is enumerated in it?

Greetings and Felicitations,

There is a danger inherent in insisting that we maintain a military standing in the rest of the world while letting our interior matters deteriorate. I'm trying to look at it logically. What do you think will happen to the domestic frontier if, during an economic crash, we decide to maintain our military actions in other countries while cutting off support for our own people? Can you honestly see a current American president, no matter who wins the election, standing up in front of the TV and telling the American population the following:

I'm sorry if this makes me an ass but the rest of the world will just have to fend for itself. We can't beggar our own country to provide security for the rest of the world. The money can best be spent here in making sure that our country is survivable. I would much rather give money to the poor here, keep our infrastructure intact, provide security for our immediate borders than help keep the rest of the world safe and fed.

Sincerely Yours,
C. David Neely

OTOH I have to say that I think what JV is suggesting is that we spend enough money to keep an adequate home defense and then look to welfare, while probably spending much less on either one; because it wouldn't make sense to wage a foreign war while we have riots at home, but we still do need some defense whatever our internal situation is.

OTOH, given our infrastructure problems, CDN's para pretty much precisely states what's been actual Republican policy since 2001, so I dunno.

The tenth amendment.

I didnt say we should be defending the rest of the world. I said defending the live of americans is our top priority. Ensuring freedom for our citizens is second, but no less important. Everything else the citizens and states are responsible for. I would much rather the govt cut itself in half, and lower taxes accordingly so that the people have the power and money to help themselves, instead of relying on a govt that is a failure. We have spent 10 times as much on the poor and the infrastructure than we have on national defense or keeping the world safe and fed. It has done no good. It is time to admit that the New Deal, the war on poverty, is lost, and withdrawl immediately. Let the federal govt get back to doing its job instead of YOUR job.

That would be correct.

A $1 government tax expenditure of a "Non-refundable lump sum tax rebate" (item#1 in table) would produce a net gain of $1.02 in GDP after 12 months. That would be a net 2% gain (based on the dollar inputs, not the overall change in GDP).

So if the US government wants to mitigate the economic damage from a recession, the best way to do it is with a temporary increase in Food Stamps program and extention of UI benefits.

Backstopping the States is also a good policy since the States tend to roll back spending pretty drastically during a downturn and that just tends to make things worse.

Accellerated infrastructure spending isn't a bad policy, but usually takes too long and way too susceptible to porkbarrel games (meaning such spending may not end up being targeted to the regions that need it most).

Not just republican policy, govt policy. When it comes to the federal govt, the gap between liberals and democrats is getting smaller. Both are slowly eroding freedom and personal responsibility to maintain partisan power. What I am suggesting is we spend $0 on welfare, do whatever is neccesary to protect the lives of our citizens from foreign and domestic violence, and reduce taxes to put power and money back in the people hands so they can take care of themselves.

The question is the OP is what is the priorty for govt spending. My arguement is that it does not matter how much money you have if you are dead from a terrorist attack, dirty bomb from Iran, or russian/chinese invasion. Put this country back to what it says in the constitution.

Pardon my ignorance as I am a foreigner. But why does an archaic document hold so much sway over the opinions of people in modern day politics ? I mean, why is it relevant what someone said back in the 1700's ?