For Higher Economic Growth, Cut Government Spending

Published July 12, 2023

Government spending surged during the pandemic but has only slightly decreased, while the projected federal deficit continues to accumulate trillions in debt annually. Historical examples, such as post-World War II and the end of the Cold War, show that substantial cuts in government spending can lead to economic booms. To achieve sustained economic expansion, reducing government involvement in private market decisions is crucial.

Discussion Questions:

1. Why would or wouldn’t reducing government spending cause an economic boom?
2. Why hasn’t government spending fallen to pre-pandemic levels?

Additional Resources:

• Read “A Fiscal History Lesson,” by David Henderson. Available here: https://www.hoover.org/research/fiscal-history-lesson.
• Read “The U.S. Postwar Miracle,” by David Henderson via The Mercatus Center. Available here: https://www.mercatus.org/research/working-papers/us-postwar-miracle.
• Watch “Reining in Federal Spending: Lessons from Social Security,” with John Cogan on PolicyEd. Available here: https://www.policyed.org/policy-stories/reining-federal-spending-lessons-social-security/video.
• Watch “Does Government Debt Matter Anymore?” with John Cochrane on PolicyEd. Available here: https://www.policyed.org/perspectivesonpolicy/does-government-debt-matter-anymore/video.
• Watch or listen to “Soft Landing: Larry Summers On Inflation, Debt, And A Looming Recession,” with John Cochrane, Niall Ferguson, H.R. McMaster, and Lawrence Summers. Available here: https://www.hoover.org/research/soft-landing-larry-summers-inflation-debt-and-looming-recession.