Letter to the Editor: Sequestration Cuts Will Increase Long-Term Growth
Re: "Drop in GDP a preview for area," Jan. 31
This article falsely claims that the U.S. economy shrank in the last quarter of 2012 due to a "plunge in defense spending." The real reason the economy shrank was because many costly new regulations will soon go into effect.
Government spending actually rose to $908 billion last quarter, up from $810 billion in the previous quarter, according to the Treasury Department's own quarterly-outlay figures. While defense spending did fall, that was more than offset by increased spending on other programs. If government spending actually created jobs, the economy would have grown instead of shrunk. In the long run, government spending wipes out jobs rather than creating them.
A November 2012 Congressional Budget Office report says that the automatic budget cuts contained in the sequestration will increase economic growth in the long term, while temporarily cutting it in the short term.