G-20 Tilt Toward Cutting Government Spending

The June 30, 2010 New York Times comments in this fashion on the resolution by G-20 nations to cut massive government spending: "Hoping that history doesn’t repeat itself, the world’s rich countries are betting that the private sector can make up for withdrawn stimulus spending." The implication that both are ways of stimulating growth and that history favors spending is wrong. It's true that the Administration's reliance on spending is due partly to the fact that government spending for WWII took us out of the Great Depression. However, the spending was direct infusion of money into the private sector to make tanks, planes and guns, which directly led to greatly increased employment and production. This was far different than the sprinkling of money here and there involved in the recent stimulus. History shows that removing constraints on the private sector through reducing business taxes is another way to directly stimulate production.