How would cutting federal spending help stimulate the economy by creating jobs ?

I understand cost cutting as a fiscal move to reign in deficits...just like tax revenue is also another component of possibly reducing deficits...just like war spending etc..

But how does cutting domestic spending by the federal government help the country get out of its current economic malaise?

3 Answers

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  • LOL
    Lv 7
    1 decade ago
    Favorite Answer

    Massive government spending takes money out of the mainstream economy leaving less for jobs. The link below has a chart which clearly shows the correlation between spending and unemployment.

  • andy
    Lv 7
    1 decade ago

    What it does is limit the likely hood of the Federal government defaulting on its debt and it also reduces are dependency on other Nations. Remember that over spending is what caused the collapse to begin with and by continuing to over spend will just create worse problems in the future.

  • 4 years ago

    A decade in the past, the Bush tax cuts had their needed consequence of having out of the slump we ere in and increasing sales. in spite of the shown fact that, the cuts have now been area of the financial panorama and have become the norm. no longer extending them now's resembling a great tax improve. Even countless Democrats in Congress be conscious of that elevating taxes in the process vulnerable financial instances is a undesirable theory. as a results of fact of this Pelosi adjourned the homestead while she did to stay clean of the vote on extending the cuts, there have been too many Dems that could vote for extending all of them. the perfect 10% (which includes the two%) of salary earners are to blame for a great style of the small and huge business enterprise interior the country. in case you unload on them, you're putting a great, fat jockey on the returned of thoroughbred business enterprise and asking why they are not winning races. What they save of their funds, they reinvest into theirs and others business enterprise. investment is fundamental to expansion. expansion creates jobs. The severe unemployment on the top of the Bush administration (>9%) had no longer something to do with the tax cuts. It had each little thing to do with the non-public loan meltdown as a results of pushing of volatile sub-top adjustable fee mortgages (palms) directly to individuals which could no longer arise with the money for them. Democrats (and their ACORN minions) have been at the back of this push yet Republicans loved the quick greenback Wall highway made on them. Bush performed "do no longer rock the boat" politics as a results of fact each physique develop into chuffed doing what they have been doing, till the non-public loan expenses reset larger. no longer basically are preserving the tax cuts in place sturdy for business enterprise, this is yet another important sign to business enterprise that the authorities is definitely involved in making coverage this is business enterprise-friendly. business enterprise is able to improve yet, up previously, has had the Sword of Damocles putting over their heads of anti-business enterprise policies. A Republican homestead on my own supplies self belief to business enterprise that somebody has their backs.

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