... Emphasizing growth also means the Republicans will have to stop advocating spending cuts in the name of achieving an ephemeral balanced budget. Instead, reducing wasteful federal spending should be pursued for the sake of freeing resources to the private sector. Every dollar the federal government does not spend is a dollar that does not have to be taken from the private sector in the form of taxes or debt. Therefore, reducing wasteful federal spending will not reduce aggregate demand. What it would do is shift economic activity from the less productive government sector to the more productive private sector, thereby stimulating aggregate output and growth.
And finally, emphasizing growth means the Republican Party must engage in the great task of replacing the current paper dollar with a dollar as good as gold. Using the CBO’s rule of thumb, achieving an average growth rate of 4% a year for the next 10 years would reduce the deficit by $4 trillion and be far better than anything the Democrats are offering to fight poverty and elevate the middle-class class. While 10-year periods of 4% growth were common under the gold standard, there has not been one ten-year period of 4% growth since 1973 – two years after Richard Nixon broke the final link between the dollar and gold.
Economic growth, not the President’s call for balanced austerity, is the path to fiscal balance, smaller government and increased liberty and prosperity for the American people.