It took the accident of World War II for government to spend and invest at a level that finally brought back full production and full employment. Annual deficits were as high as 28 percent of GDP, more than triple the current level. Once prosperity returned, however, the debt level came steadily down.Three things are wrong with these three sentences. First, to call World War II an accident is to either not know the meaning of accident, or not know the history of World War II, or both. World War II was no accident, but a culmination of a series of events, most purposefully put into motion by madmen. Full production and employment was because of World War II. Shall we build 50,000 warplanes to put the people back to work?
Secondly, to say that annual deficits during WWII were more than triple the current level is like comparing apples to oranges. In 2010, the first full fiscal year of the Obama era, the deficit was about 11 percent of GDP. Does he really want us to spend at the WWII levels? That would mean an annual deficit of nearly $4 trillion. That's just deficit spending. The government would have to spend nearly $8 trillion in one year. Astounding.
The third sentence also ignores history. The debt level came down, of course, because we were no longer fighing the largest war in history. But the debt levels never returned to historical low levels, and the U.S. Government continued to grow beyond anyone's imagination.
Next, Kuttner blames the Republicans for obstructing more government spending, as if more would do the job. But if we are already spending at record levels, then how would more of the same pull us out of this recession? This is typical of the left. If something doesn't work, maybe if I try more of the same it will work this time?
The problem is people who think like this are in charge. They have never actually created anything themselves, but have spent their entire lives in some fantasy world. Kuttner also states: "But if we pull back on public spending while the economy is still deeply depressed, that only reduces economic output. Debt would actually loom larger because GDP would be smaller."
As if government was the solution to everything. So if the government spent more, our debt would be smaller? Where's the logic in that? Kind of like Joe Biden claiming that we have to spend our way out of debt. But if government got out of the way with its voracious appetite for our money, its enormous debt (which eats up capital) and expensive and stagnating regulation and control, the private sector could once again create growth.