How, exactly does budget cuts create jobs, or stimulate an economy?

	How, exactly does budget cuts create jobs, or stimulate an economy? Every thing you cut equals another bread winner on the street, plus another tax payers money out of the loop not to mention each laid off worker will cut way back on spending. Logically that means that budget cuts make this problem worst, not better. Asked By: mrjonessr41 - 8/22/2011

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"Economist Mark Zandi of Moody's Analytics said Sunday that if all $61 billion in proposed cuts for the rest of this year were enacted, the economy's growth could be reduced by half a percentage point. Many forecasters expect the economy to grow at around 3.5?his year. By the end of the year, Zandi said, those spending cuts could cost the economy between 400,000 and 500,000 jobs." In the short term, 1-3 years, budget cuts hurt the economy. Answered By: Ralph B - 8/22/2011

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They don't Answered By: Ed Jasie - 8/22/2011

So, you're saying if you lose your job and source of income that you shouldn't cut back, and instead spend and splurge your way into prosperity? Answered By: Pfo - 8/22/2011

Because it keeps tax payers $ from going in in the first place. Has anyone here taken economics? Answered By: RJC - 8/22/2011

The magical free market, because set the private sector free and supply will create its own demand. Except, in practice, when their is no confidence in the economy,no-one is willing to invest so supply does not rise. This is exactly why japan hasnt grown in 20 years.no investor confidence compounded by the high personal debt thatis caused bygovernment dedicit reduction. Answered By: MagpieRhino - 8/22/2011

In some ways they can (PLEASE READ THE ENTIRE POST) -We could cut down on the Military (Note that cutting stuff like Education will only worsen the economy and drastically reduce the number of jobs in the future)---cutting that down (which may at first increase unemployment because of the fake jobs in the military suddenly being eliminated--fake as in they only drain tax payers and they don't exactly help Middle eastern nations) could bring in more college graduates, and therefore, a better economy. -If you want a real solution, we could remove tax cuts for those hiring offshore workers (but GOP of course would vote against that---see source) which would discourage outsourcing (if you don't discourage it, how do you expect for people to stop it???) and therefore bring jobs back to the US allowing us to keep our money, reduce the deficit, and consequently stimulate the economy. its interesting how GOP is utilizing the thing that they are supposedly against: New World Order "DoubleThink"---somehow 1 minus 1 is equal to 2---somehow outsourcing jobs will create more jobs in the USA. Source(s): http://www.examiner.com/democrat-in-las-vegas/republicans-vote-to-continue-outsourcing-jobs-overseas Answered By: REMOVE TAX CUTS FOR THOSE OUTSOURCING JOBS! - 8/22/2011

You are confused because you are thinking of government workers as taxpayers when in fact they are tax receipiants. every time a non crutial government job is lost, the economy is better off. evey dollar that stays in the economy (rather than going to the government) is a dollar that can go to hiring a worker in the real economy or will at least make the economy stronger by profiting the business that didnt pay it in taxes. the idea is that if the budget is smaller the tax burden will also be smaller but this is by no means the obvious conclusion. there is a movement about to punish those who do the hiring if thier success reaches a certain level by raising thier taxes. for some, the arguement that those who succeed in investing in business (the wealthy) are a burden to the economy and that the government drives the economy has been won when the oposite is true. Answered By: karl k - 8/22/2011

They don't. That's why America had better wake up to. The GOP have convinced many that cutting spending is the solution to our deficit and debt problems. It's not. So while the GOP keep America's mind focus on cutting spending, they've yet to come up with a plan to create jobs and/or stimulate the economy. Because even if you stop spending completely, without additional revenues coming in via tax increases, nothing will be solved. Answered By: darrin b - 8/22/2011

Cutting back on government, while a good idea, is not good for the economy nor does it help the unemployment problem. Right now we need for the government to spend more on public works projects to get people working again and to put money in circulation. The wealthy corporations are just sitting on their money and not investing or hiring in this country. Answered By: Older is Better - 8/22/2011

If you cut salaries of ceos in america we would have billions for lower paying jobs Answered By: i was Hacksaw - 8/22/2011

Logically speaking, every dollar spent by the government had to be taken out of the economy through taxation. Money in the private sector is spent or invested, take it out and there is less money being spent and invested by individuals that earned it. Yes the govt. spends that money which goes into the economy but in a less efficient way. Then there is deficit spending which may boost an economy short term if used in a proper fashion. This also takes money out of the private sector because people buy bonds with their disposable income. Excessive debt and deficits can cause anxiety which cause a negative effect on economic growth. This is the problem we face now. We have lived through three years of foreclosures and bankruptcies in the private sector, people get that they were living beyond their means. Now they see a govt. that is living beyond their means and it scares them. They see how catastrophic our over spending was and can only imagine how bad things would be if the govt. collapses under its a debt obligations. Look at the price of gold for the last four years if you don't think people are petrified of our and the European debt liabilities. A large part of an economy is driven by psychological attitudes and most people aren't in the mood for larger debts. Answered By: Mike - 8/22/2011

If we were at full employment, then a reduction in government CONSUMPTION would mean more private consumption. But we are not at full employment, so laying off government workers will simply add to overall unemployment. And we are mostly transferring income from one group to another, so the overall economy will see little increase in output. And, there will be no income tax effect, since our income and effective corporate taxes are the lowest in 30 odd years. Answered By: ObamaBot THX-1138 - 8/22/2011

During times of economic boom budget cuts can be a help to the economy because they put skilled workers back into the work force. But when the economy is bad like now such cuts will lead to a depression. Answered By: skipjack2012 - 8/22/2011

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