How government and the economy intertwine

"The economy needs ... you," screams the Aug. 10 headline, exhorting consumers to consume more. One is reminded of Pravda exhorting workers to work harder so that the latest five-year plan might be met.

But the Star Tribune missed an opportunity to explain why consumer spending, and government spending, is good for the economy. It's because consumer spending and government spending is the GDP.

Together these are two of the four components that are used to compute gross domestic product. The other two are business spending on plants and equipment, and an export/import adjustment.

So when government spending declines, as it has been forced to do by the nihilists of the right, GDP must go down unless those declines are balanced by increased spending elsewhere.

Since the recent debt deal reduces government spending, it must also drive down the GDP for that reason. (That's also why it was government spending that brought us out of the Great Depression.)

So when the economy continues to tank during the next two or three years, I hope the newspaper will have the honesty to lay the blame where it belongs: On the idiotic, backward and destructive economic policies of conservatives, who drove us into the ditch in the first place, and now seem eager to drive us deeper and deeper into it.


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The recent federal budget states that the 2011 U.S. government revenue is roughly $2.2 trillion dollars, and the amount the country plans to spend for the same period is $3.8 trillion dollars -- that is to say, we plan to spend significantly more than what we take in.

In this light, combined with the difficulty and brinkmanship displayed by both sides of the aisle in trying to come up with a new debt-limit agreement, Standard & Poor's decided to downgrade our credit rating. So what do our administration and some members of both sides of both House and Senate do?

They try to discredit S&P. They are acting like petulant children who have been reprimanded. Now, further soiling themselves, they are talking about a congressional investigation of the ratings agency. Please -- stop! Take the downgrade as a warning shot over the bow before sinking the ship of state.


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Incredibly, President Obama's prescription for job growth seems to be as follows: Raise individual and small-business federal income tax rates; raise the capital gains tax; implement card check to make union organizing easier; tax carbon usage; restrict drilling for oil; implement a costly new medical entitlement; refuse to address the astronomical cost of Medicare, Medicaid and Social Security; refuse to reduce the number of armed forces stationed overseas; continue to run $1.5 trillion annual deficits ensuring higher taxes, interest rates and inflation; refuse to privatize Fannie Mae and Freddie Mac; refuse to simplify the federal tax code; refuse to introduce competition in the field of education by allowing public school vouchers; tax CO2 output, and increase government regulation on the private sector by implementing Dodd-Frank.

As a business owner employing several hundred people, let me be the first to tell Obama that virtually every tenet of his economic plan will raise my cost of doing business, limit my ability to compete and ensure that I hire no one.

The president would be far better off if he would simply lower the business tax rate to the worldwide norm of 25 percent, simplify the tax code so everyone pays their fair share, control government spending by reducing the growth of entitlements and defense, and pass a balanced budget amendment. If he did those things, the private sector would spring to life, millions of jobs would be created and the country would be well on its way to financial health.

DOUGLAS MCMillan, St. Paul

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I can't help connecting Wednesday's front-page article ("The economy needs ... you") with the featured letter to the editor of the same day ("The reuse of usable materials is an ethic worth preserving").

Mass consumption of anything and everything is not a wise prescription -- it generally will increase pollution of our air and water. Pollution is a drag on the economy and costs us taxpayers dearly in health and clean up costs.

We are smarter than that. It is smart, thoughtful consumption that is needed. By supporting Minnesota's great variety of reuse and repair businesses, we can feed our local economy and our wants and needs at the same time, with less pollution.


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We'll pay for injuries one way or another

An Aug. 10 letter refers to the cost to society for the choices made by a helmetless biker or beltless driver if injured. The point was made that the choices of an individual have potential dollar costs for all of us.

The writer then adds that universal health care would make this aspect a moot point. Unfortunately, the cost of care would still need to be paid. With universal health care, it would be paid by the taxpayers. Universal health care isn't free; the premiums are just in a different form.


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Praise workers without the class warfare ...

Nice tribute to construction workers in the Aug. 10 letters ("Gratitude for those who put in the effort"), marred only by the cheap shot at our "college elite."