Government spending helps the economy during a recession

Con: "Say the government spends 100 billion dollars, they can either pay this with tax money or by borrowing 100 billion dollars (with interest), This would fufill the circular flow. The result of this, nothing if not negative. The consumers may have more money but they now have to pay more taxes, this offsets any fiscal gain from the government spending. It may be more, depending on the interest rate on the government loan. This makes spending during a recession harmful." Consumption spending accounts for 70% of GDP. If the government spends borrowed money in the form of government wage increases or through public projects, people will have more money to spend. One of the key tenants of economics is that people have insatiable desires. People will desire more goods and more services the more money they have. So once government spending increases the amount of money people have in their pockets, the more those people will spend. The more people spend, the more demand there is for goods and services. In order to keep up with demand, businesses will need to employ more people. By employing more people, those employees now have more money to spend on other businesses. Okun's law shows that when unemployment falls by 1% GNP (Gross national product) rises by 3%. The result of this spending is a compounded increase in GDP so the result of this is net positive. This means that the pool of money is now greater than the amount of tax needed to pay off the initial borrowed amount. This is all due to the multiplier effect. This is the formula for the money multiplier: Y = incomeG = government spending K = money multiplierMPC = marginal propensity to consume (how many cents per every dollar is spent with an increase in income)Assuming a modest marginal propensity to consume at 0.80c per every $1.00 in additional income (MPC = 0.8) the formula is as follows: This means for every $1 in government spending, $5 of additional income will result. This supports my point that government spending will have a compounding effect and will result in a net positive amount of taxable income to repay the initial loan. "Say the US government orders a $10bn aircraft carrier. You might assume the effect of this would be merely to pump $10bn into the US economy. Under the multiplier argument, the actual effect would be bigger. The shipbuilder takes on more employees and generates more profits; its workers spend more on consumer goods. Depending on the average consumer’s “propensity to consume”, this could raise total economic output by far more than the amount of public money actually injected. If the $10bn increase caused total United States economic output to rise by $5bn, the multiplier would be 0.5; if it rose by $15bn, the multiplier would be 1.5. http://www.telegraph.co.uk...Con: "My opponent may say that the debt is not payed back immediately. But this too is is a harmful option. If the cost of government spending is offset, then the dollar will lose its value as a fiat currency. The world market will see that government as irresponsible or illegitimate. Because after all, what is the point of money if you can spend it and never pay it back? This is where Centarus parabus comes in, it means all other things equal. It is a term used in economics for specific examples and models. We have to make certain assumptions in order to be able to predict or analyze anything (as we are doing right now). We assume that the economy is in equilibrium, if we don't answering the question would be impossible."I have a good example to show why my opponents claims are false about the dollar losing its value as a fiat currency. We are talking "ceteris paribus" but in round 1 I specifically said that this debate pertains to the US economy. Our national debt was 9.2 trillion on Dec 31st, 2008 and it was 17.3 trillion on Dec31st, 2013. So our national debt almost doubled over this short span of time. Let's see if inflation or the dollar as the world's reserve currency has changed: http://www.usinflationcalculator.com...so as we can see, inflation is steadily decreasing despite doubling our national debt over the course of a few short years. So there's no problem there. Let's look at who holds the US dollar globally. http://qz.com...So as we can see, the US dollar is just as strong, if not stronger than ever as the world's reserve currency. This means that foreigners have the highest demand for the US dollar by a large margin. This trend continues despite the national debt increases.Furthermore, my opponent misrepresented my statement when he claimed that I said gov. contibutes to 70% of GDP. I originally said: "Increased consumption spending (made possible by increased government spending) stimulates the economy and accounts for 70% of our GDP." So when I said this I was referring to consumption spending all along.I have shown why government spending helps to expand and stimulate the economy during a recession despite my opponent's claims of lost faith in the dollar, uncontrollable inflation, and a net 0 effect or loss of income with all of my sources. Thank you.