Some on the left have assailed a Wall Street Journal op-ed
by top Romney economic adviser Glenn Hubbard claiming that Mitt
Romney's economic plans set the goal of having federal expenditures be
20% of GDP by 2016. They currently stand at 24% of GDP. As John Cassidy writes:
Historically, the last time government spending as a percentage of GDP was cut by about 4 percentage points in four years or less was in the 1950s, when government expenditures went from 20.4% of GDP in 1953 to 16.5% of GDP in 1956. The end of the Korean War played a considerable role in that decline in spending. So such a decline over a short time is not unprecedented, though declines of that kind usually take place after a war has drawn down. This magnitude of decline is usually accompanied by a recession (as happened after World War II and Korea), an outcome Romney may want to avoid.
Is this credible? As far as the immediate future goes, Romney is promising austerity. Hubbard reiterates that he would aim to reduce federal spending from roughly twenty-four per cent of G.D.P. in fiscal 2012 to twenty per cent by 2016. Romney hasn't spelled out how he would reach this target, but simple arithmetic suggests he would need to impose about five hundred billion dollars in annual spending cuts, which is equivalent to more than three per cent of G.D.P.I think it's a little more complicated than Cassidy lets on, however.
Historically, the last time government spending as a percentage of GDP was cut by about 4 percentage points in four years or less was in the 1950s, when government expenditures went from 20.4% of GDP in 1953 to 16.5% of GDP in 1956. The end of the Korean War played a considerable role in that decline in spending. So such a decline over a short time is not unprecedented, though declines of that kind usually take place after a war has drawn down. This magnitude of decline is usually accompanied by a recession (as happened after World War II and Korea), an outcome Romney may want to avoid.
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