Think of our nation's GDP as though it were our household income -- but with 30 percent of government spending (which is included in GDP) being paid for by government borrowing. If we want to really improve the GDP of our economy, we have to focus on the areas other than government spending.
Continually using deficit-driven government spending to shore up GDP is reminiscent of the character Wimpy in the cartoon "Popeye," who was continually pleading, "I'll gladly pay you Tuesday for a hamburger today." Let's call this urge to get something today and leave payment until later as Wimping out.
Using deficit-financed government spending to fuel economic growth is a timing issue. Eventually, the debt will have to be paid off, or inflation will have to occur, which would, in effect, monetize the debt, making each dollar less valuable and negatively affecting those who have been fiscally prudent and saved.
To really grow GDP -- and for a longer period than just the three months before an election -- we have to create an environment that fosters rapid innovation, risk taking and economic growth. This means an economic environment that is stable in both fiscal and monetary policy (business owners hate uncertainty because they cannot plan) and regulations that are streamlined to encourage innovation, risk taking and job creation.
In the end, driving growth through government spending that we have borrowed is simply wimping out.
Losing Jobs Over Ex-Im’s Expiration? Don’t Believe ItLosing Jobs Over Ex-Im’s Expiration? Don’t Believe It | Ed Feulner