Can spending cuts really spur growth?

John W. Battenfield, Las Vegas

Monday, Aug. 15, 2011 | 2:03 a.m.

During the recent debt-ceiling debate, I read and heard comments from the political right asserting that cutting federal spending will lead to economic growth (which leads to job growth). What I don’t understand is how this will happen (and I freely admit that my education is somewhat limited).

According to what I’ve read about the Great Depression, by 1936 the nation’s unemployment rate had fallen from 25 to 11 percent. Industrial output had returned to levels comparable to the late 1920s (precrash). In the spring of 1937, under pressure to reduce the deficit from the conservative coalition, government spending (stimulus or the New Deal) was curtailed. By the end of 1937, unemployment reached 14 percent; in 1938 it rose to 19 percent, and manufacturing output fell 37 percent. This recession lasted 13 months and only ended through more deficit spending (the Lend-Lease Act and large military expansion).

So please, fellow readers, help me understand how cutting government spending will lead to growth in our nation’s economy. I’ve heard many nebulous arguments about confidence returning to the business sector if the federal budget is cut, but I’ve yet to hear a well-reasoned argument based on facts.

Further stimulus is politically impossible. But cutting spending will lead to job losses in the public and private sectors (governments buy goods and services, too). So explain to me with facts how deficit reduction is a good idea right now.