According to Howard Lutnick, the idea is to separate them and make them transparent; The measure is part of Musk’s efforts to reduce the size of the federal agencies
The secretary of the United States Commerce, Howard Lutnick, declared on Sunday 2 that the expenditure of the United States government can be separated from reports on reports Gross domestic product (GDP). Lutnick’s declaration came in response to questions on the fact that these are spending cuts promoted by the Department of Efficiency of the Government of Elon Musk It could cause an economic crisis.
“You know that the governments have historically moved the GDP,” Lutnick said to Fox News Channel “Futures on Sunday morning”. “They tell the public spending as part of the GDP. So I will separate them and I will make them transparent.”
In this way it can complicate or distort a fundamental measure of the health of the American economy. Public spending is traditionally included in GDP because changes in government taxes, spending, deficits and regulations can affect the trajectory of growth. GDP relationships already include large details of the government, which offer a level of transparency to economists.
Musk’s efforts to reduce the dimensions of federal agencies can involve layoffs of tens of thousands of federal employees, whose loss of income can potentially reduce their expenses, affecting companies and the economy as a whole.
The observations of the United States Secretary of Commerce echoed to Musk’s topics made on Friday in the X that public spending does not create value for the economy. “A more accurate measure of GDP would exclude public spending,” Musk wrote on his social media platform. “Otherwise, you can climb the GDP artificially spending money for things that do not improve people’s lives.”
The topic articulated so far by Trump’s government authorities seems to minimize the economic benefits created by social security payments, infrastructure expenditure, scientific research and other forms of public spending that can model the trajectory of an economy.
“If the government acquires a tank, this is GDP,” Lutnick said on Sunday. “But paying 1,000 people to think about the purchase of a tank is not the GDP. This is inefficiency and waste, has wasted money. And, cutting it, while it appears on the GDP, we get rid of it.”
THE Bureau of Economic Analysis (Bea), from the Department of Commerce, published his latest GDP report on Thursday 27, showing that the economy has grown at an annual rate of 2.3% in the last three months of last year.
The report allows you to measure the forces that increase the economy, showing that the earnings at the end of last year have been largely led by a greater expense of consumers and a revision on the federal expenditure related to the defense. However, the component of the Federal Government of the GDP ratio for the whole year 2024 increased by 2.6%, slightly below the general economic growth by 2.8%last year.
In the GDP report, government expenditure represents almost a fifth of the personal income of the population, which last year totaled over 24.6 trillions of dollars. This includes social security payments, benefits for military veterans, medical and doctors and other. But the report also measures the amount of personal income paid in tax taxes.
The government does not always contribute to GDP and can subtract from it, which took place in 2022, when the pandemic help expired.
Lutnick said that the Trump government will balance the federal budget with the cuts in shopping, stating that this would help growth and reduce consumer interest rates.
“When we balance the budget of the United States, interest rates will decrease in a dizzying way,” he said. “This will be the best economy that someone has ever seen. And betting against it is silly.” /Associated Press
Source: Terra
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