No, TNR, Mitt’s No More Keynesian Than Obama Is Kenyan

This is pretty dumb, even for TNR. Of course no one is talking about cutting $1T off the 2012 federal budget for 2013 — that would be a 30% cut in one year! Not even Rand Paul is considering cuts that large, to say nothing of Paul Ryan’s more centrist plan.

And yes, it is simply an accounting identity to say this would reduce GDP — but note that $1T is more than 5% of our $15T GDP, suggesting Mitt believes the fiscal multiplier is actually negative. (There’s also the problem that aggregating consumer spending with government spending for GDP purposes is problematic because the former includes trillions of decisions made by self-interested consumers using their own money, while the latter is seized and spent by the legendarily inefficient gov’t, meaning that when spending shifts from government to consumers there are hidden gains, and vice versa.)

In short — no, Mitt’s comments were not Keynesian in the slightest.

It should also be noted that Keynesian thinking has been very wrong on gov’t spending cuts before. The largest budget cuts in history happened when we demobilized after WW II (and removed much of the New Deal), and were followed by a short, sharp recession then rapid growth despite widespread predictions of doom from contemporary Keynesians.