Growth is essential

For a long time, much of the debate in this country has been on spending cuts and tax increases. The issue of restoring growth has been given less attention than it deserves. True, Time Pawlenty has made a goal of 5% growth the aspirational target of his economic program. The other GOP candidates have all talked about growth to some extent as well (except for Ron Paul who is not a serious candidate.) For his part, Obama has talked about growth through green jobs and high speed rail and other public "investment"; Obama, however, has taken action after action that works to slow growth. First, we have Obamacare. There is a plethora of regulations coming in the next few years that will increase the costs for employers in the USA by unknown amounts. Then we have the assorted tax increases that Obama has either gotten through Congress or is currently pushing. Then we have the other regulations which are coming from the EPA or the agency implementing the Financial "Reform" Law. On top of that you have the Obama drilling moratorium and other actions to raise energy costs.

Growth is critical for lowering unemployment. Growth, however, is also critical for deficit reduction. This is a point that gets said on occasion, but it is rarely explained. Think of it this way: the GDP of the USA is expected to be roughly $15 trillion for 2011. If the growth rate can be increased by 2% in the next year, that means that there will be about an additional $300 billion of GDP. Since the federal government currently takes about 20% in taxes out of GDP, that means there will be an additional $60 billion in taxes for the next year. When we use the ten year budgeting that is now the common practice in Washington, that additional 2% for just the next year means an additional $600 billion dollars in taxes for that period. Of course, that is the number achieved with just a one time bump of 2% in growth. If the 2% increase in growth is maintained for ten years, the additional tax revenue comes to more than three trillion dollars for the decade. Of course, that extra growth means more jobs and fewer people needing assistance. This should result in a major cut in spending on the relevant programs. It ought to be enough to bring the total deficit reduction from the 2% growth to more than 6 tillion dollars over the next decade. And this is just a 2% increase in growth. That would mean an increase from 1.8% to 3.8% growth based upon last quarter's numbers. If we hit the Pawlenty goal of 5%, the six trillion goes above ten trillion dollars.

In other words, economic growth is the very best way to reduce the federal deficit. When you couple growth with reductions in other types of federal spending, it is not hard to see us actually get back to a budget surplus.

None of these are pie in the sky numbers. The only ones in the USA who seem to think that we just have to be satisfied with less are Obama and the Obamacrats. REstoring growth is not that hard. Sure, there will have to be some painful decisions made and some people hurt as the current groups receiving government subsidies are left to fend for themselves. Nevertheless, I will not lose any sleep over the idea that farmers have to live with markets without ethanol subsidies or oil companies will have to profit on the oil and gas they produce rather than on federal subsidies. Even if those in the middle class who get benefits through tax credits and the like will have to make do without them. Nevertheless, if the country returns to high growth, the economy will produce millions of jobs, the standard of living for all will rise and the temporary sacrifices will be more than repaid with interest.