Early last year, with the sequester about to begin, President Obama stated that “these cuts are not smart, they are not fair, they will hurt our economy, they will add hundreds of thousands of Americans to the unemployment rolls.”
He made this statement because Keynesian theorysays government spending can boost “aggregate demand” and goose an economy. So less government spending obviously must be bad for growth.
Then, in October, Obama claimed that the partial government shutdown “inflicted completely unnecessary damage on our economy” and also asserted that, “every analyst out there believes it slowed our growth.”
This statement also was based on the notion that government spending is a form of “stimulus” for economic performance. So anything that slows spending must be a downer for the economy and job creation.
The President had good reasons to worry, at least based on the aforementioned Keynesian perspective. The burden of government spendingdeclined in 2013, both in nominal terms and as a share of economic output.
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