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Larry Kudlow | The Pro-Growth Sequester





And please remember that these so-called cuts come off a rising budget baseline in most cases. So the sequester would slow the growth of spending. They’re not real cuts in the level of spending. (Not that a level reduction is a bad idea.)

Looking at the sequester in this light, it’s clear that it won’t result in economic Armageddon. In fact, I’ll make the case that any spending relief is actually pro-growth. That’s right. When the government spending share of GDP declines, so does the true tax burden on the economy. As a result, more resources are left in the free-market private sector, which will promote real growth.

The Wall Street Journal editorial page points to the Reagan 1980s and the Clinton 1990s, when domestic spending as a share of GDP fell significantly and the private-sector economy boomed. Ditto for the post-World War II period, when spending declines as a share of the economy were quite substantial and the private economy came back strong.

More.



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