In a recent session of the Joint Select Committee, Senator Toomey questioned Dr. Douglas Elmendorf, Economist and Director of the Congressional Budget Office about broadening the tax base and the substantial increase in non-defense discretionary spending over the past decade.
Government can’t really create demand on balance, it can substitute public demand for private demand but it’s illusory to think the government can simply step in and make up for what is perceived to be a shortfall of private sector demand and by the way, I would suggest that there are governments such as Greece and Italy and Portugal and Spain who’ve created a lot of demand domestically through their excessive spending and it’s not working out so well for them.