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The New Deal was a Great Depression-era spending program designed to get money into people's hands by building a ton of government infrastructure and paying people for it.
it created thousands upon thousands of stable, family-sustaining jobs by creating new govt departments and expanding others.
those people then used their wages to purchase goods and services from OTHER merchants, and that knock-on effect is what ultimately kickstarted the American economy.
so, in reverse: cutting government programs also cuts jobs. the government is still a gigantic employer (and, often, an attractive one!), and the wages those people spend will no longer be moving in the economy.
combining reduced demand due to unemployment with the reduced demand on everything else that those govt programs were purchasing (all of which is the domestic economy, btw, not a foreign one) and the effect could be, to put it lightly, dramatic. 1 reply
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