So, apparently the theory emanating from the left, especially in the person of Paul KKKrugman, is this: we need massive government spending, trillions of dollars, to grow the economy, and then everything will be great. Otherwise, we're doomed.

There's a very simple, easily-understood reason why Krugman and the other statists are almost certainly wrong: marginal government spending at 45% of GDP is not likely to create much real growth. Real growth happens when someone figures out a way to provide a product or service that is either new and desirable, or a cheaper substitute for an existing product or service -- in other words, productivity gains that make consumers' lives better. Now, obviously government can add value -- if there were no roads or rail between, say, Chicago and New York, it would be useful for the gov't to exercise eminent domain and get them created. And obviously preventing monopoly, fraud, external costs like pollution, etc is also economically useful. But after it's paid for all the economically efficient regulations, roads, and rail (note that even at current supply, rail is generally not a paying proposition) an economy can support, mostly what government can do is inflate bubbles. Someone remind me, how'd messing with housing via Fannie and Freddie work out?

Government spending is at 45% of GDP; post-WW II federal revenue has generally been in the range of 18-22% under all tax schemes, overall revenue is around 28% by most estimates. Krugman argues we need gov't to spend 65% of GDP. It's a ludicrous notion that there are trillions of dollars of economically useful things to buy with that money, surpassed only by the even more ludicrous notion government knows what those things are but the markets don't. We are not Afghanistan, bereft of basic roads, schools, rail, bridges and airports. Building Bridges to Nowhere is what Japan tried in their Lost Decade, and it didn't work. What we need is capital working in the private sector to generate more productivity gains.

If we want to free up capital for that currently unknown genius, sitting in his garage right now about to create the next Google or Amazon or Intel, then government spending must be cut to match government revenues. Here's some ideas on where to start.