Here's the conclusion of "Deficits: Do They Matter?" by Brian S. Westbury and Bill Mulvihill of First Trust Portfolios L.P.:
The one worry we have is that government spending has soared – from 18.4% to 20.1% of GDP between 2000 and 2005. This spending represents resources shifted from the private sector to the public sector. With entitlement spending set to rise dramatically in coming decades, this spending is the real threat to the economy.
Precisely. The focus on deficits is misplaced; the real threat to the economy is the amount of government spending. The more government spends, the less there is for the private sector to consume and invest.
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