Rep. Tim Huelskamp
This is both
funny and depressing. Rep. Tim Huelskamp (R-KS), a tea party freshman, opponent of the debt ceiling deal and apparent denier of all reality, asked the CBO to show him that government spending does indeed contribute to the economy.
Huelskamp wanted to know the answer to two questions:
1). What current federal departments, agencies, programs, or portions thereof do not contribute to economic growth?
2). In the programs that CBO believes do contribute to economic growth, what level of spending cuts would amount to a level you believe would be significant enough to "probably slow the economic recovery"?[...]
In a response letter Thursday, CBO-chief Doug Elmendorf gives Huelskamp a layman's lesson in Keynesian economics: Under current economic circumstances, new federal spending would help economic growth, and current and future cuts could stymie it, particularly if they hit key government investment.
"When demand for goods and services falls short of the economy's ability to produce them, as is the case currently, increasing government spending can increase aggregate demand and thereby narrow the gap between the economy's actual and potential levels of output," Elmendorf writes.
The precise details matter. The more robust the economy, the lower the impact. But, according to Elmendorf, "when the Federal Reserve's ability to lower short-run interest rates is constrained because those rates are already near zero, as they are currently, the short-run effects of changes in government spending on output tend to be larger than usual."[...]
"Some types of spending, such as funding for improvements to roads and highways, may add to the economy's potential output in much the same way that private capital investment does," Elmendorf writes. "Other policies, such as funding for grants to increase access to college education may raise long-term productivity by enhancing people's skills. The positive longer-term impact of deficit reduction on GNP would be smaller if the policies that reduced deficits included cuts in productive government investments."
Yes, we do have members of Congress—the ones holding our economy hostage on a regular basis, as a matter of fact—who are either so thick or have drunk enough Norquist/teabagger Kool-Aid that they don't understand the very basics of government and economics. Welcome to 2011.