Globally among major OECD's from 2008 through 2011 the empirical relationship of changes in real gov't spending to change in real GDP shows that % Change in GDP = 0.89 x % Change in Gov't Spending - 2.3%. Slope of the relationship (my line) are from my own eyeballing the data points
The data spread is really very tight considering all the variables in types of gov't spending over all the nations shown in the chart. There are only 2 outliers.. .Estonia on the low side, and the other one on the high side wasn't identified.
There is one point though that indicates when the average change in Gov't consumption is zero (0), GDP drops by 2.3% on average. This says that on average over all nations, a change in gov't consumption of at least +2.6% is required just for zero change in GDP... and that an even greater increase in in gov't consumption is required for positive growth in GDP.
Another way of saying this is that gov't consumption is a necessary and vital ingredient for national improvements in GDP... and that reductions in the change of gov't consumption below ~ +2.6% are going to produce a negative growth in GDP. Yes.. .there's some scatter to the average relationship, but the trend even with scatter is the same over the 3 year time span involved. For gov't to consume requires taxes (at least... perhaps even borrowing)... so taxes consumed by Gov't are necessary for national economic growth.. which is also to say taxes collected by gov't are necessary for national economic growth.
One can argue the theories about why this is the case, or even propose theories that defy the overwhelming evidence to the contrary, but neither can change the actual observation of real facts at hand. A simple way of looking at this is that gov't is just one of the elements of consumerism... right along with the individual citizens & big and small business.
If you want to grow the national economy by 5%, then gov't consumption has to increase by ~ 8%. If you don't increase gov't consumption then you'll (on average) reduce GDP growth by -2.3% . This is also the same as when consumer's don't spend (in the US it's 70% or so of GDP) then GDP not only doesn't grow, but it declines into negative growth territory (duh...what happens in recessions and when unemployment is high).
In 2011 the US Gov't spent 38.9% of GDP (GDP was low). Thus to grow GDP from the 2011 base by 5% would required the US to grow spending by ~8% of 38.9% of GDP in 2011... or by ~3%.over 2011's spending. Since GDP is in the $13 Trillion range, then increasing it by 5% means GDP increasing by $0.65 Trillion, while only increasing Gov't spending by $0.15 Trillion... a 4:1 advantage in economic growth over Gov't spending. You can play with the numbers any which-way, but the net will still be that increasing gov't spending increases national economic growth by far more (2 or more multiples) than it costs to create it. This of course also increases gov't revenues (increasing GDP increases gov't revenues), therefore offsetting the actual costs of increasing Gov't spending.... making the advantage even greater than the first order calc would lead you to believe.
I just thought it was instructive to show, using real top 20 OECD nations empirical fact, that increasing Gov't spending is a pre-requisite to economic growth, thus jobs, thus increasing revenues, thus benefits to society. Decreasing Gov't spending or just leaving it the same, has quite the opposite effect. This isn't opinion, this is the observation of fact. Not that the facts are necessarily enough to change peoples opinions about whatever bias's and prejudices they already have and hold onto for dear life, but that at least the facts can't be disputed by any objective criteria..
if you are in favor of reducing the deficit by reductions in gov't spending then you're also favoring (whether you realize it or not) reductions in GDP growth, hence increasing unemployment, and reduced benefits, and this is a negative spiral for which the end point is a deep, deep depression and endless deflation. I don't think anybody that believes the US is a great nation wants that... but to hear some of the nations citizens talk, you'd think they are in favor of reducing the US to the status of one of the poor African nations because somebody is leading them to believe that reductions in deficits now will aid the US in coming out of it's economic demise and grow again... when in fact it will have just the opposite effect.