Scott Grannis, one of my daily go-to economic bloggers, write in his Calafia Beach Pundit–  The Failure of Keynesian pump-priming 6/30/11


Spending is the elephant in the living room, and it needs to be cut back sharply. Government spending doesn’t add to demand, it wastes resources. When the government spends more than it takes in, that money has to come from somewhere. And when government spends money it does so much less efficiently than the private sector. Moreover, deficit-financed spending takes just as many resources out of the economy as tax-financed spending. The only difference between the two is that when the government borrows to finance its spending the private sector at least has the hope of recovering the money some day, whereas with higher tax rates there is no hope of recovery. Plus, higher tax rates impact future decisions adversely, since they reduce the after-tax rewards to saving and investing and thus reduce future living standards by depressing investment activity.

HKO comments:
In his post Scott Grannis discounts the federal spending resulting from economic declines and focuses on the spending above and beyond that.  If we are lucky this poorly performing economy will bury Keynesian nonsense, but the Keynesian ideologues seem agile at avoiding any accountability.