Wow, I thought this kind of thing was done away with years ago

[Jester]

What did the mad spending get us? Other than the wars, which are certainly not budgeted, and an unaffordable prescription drug program, I don't recall any other expensive Bush initiatives.

"Aside from that, Mrs. Lincoln, how was the theatre?"

Not that there needs to be any more to condemn the man, but the first gigantic round of bailout money was on Bush's watch.

No. And, it doesn't surprise me that some guy tried to sell that snake oil. Were I 18 again, I might have been a proponent.

I would have thought Steven Landsberg would have been up your alley, being almost absurdly libertarian. Guess not.

With the current debt, and existing stimulus and deficit spending, everyone's future is bleak.

I wouldn't be that pessimistic about it. The debt sucks, but it's not *that* crippling. (The stimulus is helping not hurting, so that's backwards.) But in any case, the US is still vastly richer not only than it has been historically, but also vastly richer than any other country in the world (save Luxembourg and a couple other microstates). If your future looks bleak, it still looks a lot less bleak than ordinary life for most people on the planet.

Do you agree that the focus (80%) of the prior non-stimulus on propping up the failing state budgets was the core of our current problems?

First, wasn't the amount for propping up state budgets more like 10% than 80%? Second, heck no. That's not "non-stimulus," whatever on earth that means. That's stimulus - money in the hands of people who are going to spend it on stuff they need. Government employees with jobs. Welfare cheques in the mail. Public works contracts that go through, rather than being cancelled.

The implosion in state budgets is something the Feds should have done far more to deal with - and still should. As Atrios points out, it's like having 50 little Herbert Hoovers, tightening belts and slashing costs and sinking the country deeper into depression. A boost to the state budgets would be the fastest, easiest way to get money into the economy directly, rather than throwing it at banks who will just sit on it, or at projects which will not yield results for another year at least.

Had the government spent a trillion dollars on industrial outcomes that would improve the non-government side of the US GDP, then we might have averted the malaise we are in currently.

How do you spend on "industrial outcomes"? Subsidize industry directly? That's not creating "non-government" work. That's just giving government money to private companies, and asking nothing in return - industrial welfare. If you were just going to be giving money away, why not give it to consumers?

It is a pretty simple problem. People view government jobs as equal to private sector jobs. Realistically, it takes X amount (probably about 8 to 10) private sector jobs to provide the funding for one government job. Then also, the government needs to spend money on actual products and services, which require more private sector jobs to fund. In these down turns, people actually consume more services thus propelling government spending even higher, and requiring more people to actually manage the demand for services.

While I have no idea if your numbers work out, the principle is fine. So, what happens when people lose those jobs, both in government and outside of it? What happens when they don't receive support? They stop private spending, which lowers the velocity of money. Tax revenue drops, consumer spending drops, private firm profits drop, and the economy enters into a deflationary spiral 'o death (See: Depression, Great.) What keeps you out of it is a temporary increase in government spending, until the economy has time to get back on its feet and up to normal employment. Then you can talk about raising more revenue to pay down the debt.

When the size of government exceeds about 10% it becomes unsustainable.

Where'd you get that number? The top of your head? The US average is about 17%, from your own link. Canada is 20%. The UK is 20%. The Scandanavian countries hover around 30%. None of these countries has yet imploded - they're still the richest, most successful countries around. Is your idea seriously that almost the entire first world has between 1.7 and 3 times the sustainable level of government employees? That somehow seems implausible.

The way I look at it is that government is a parasite on industry.

"The parasite has his eye on Rapture. Keep your eye on the parasite."

-Jester