We need to increase government spending and lower taxes

I never said that taxes were a sub-part of government spending. I said that taxation is one of three ways that government can borrow. I also agree with your definitions of contractionary / expansionary fiscal policy. You've just elaborated on the simple definition I've given last round. Answering your questions: No, the government is not on a contractionary fiscal policy state. Our deficit is about $500 billion [1] meaning that we are still borrowing more money each year, but just borrowing less than the previous year [2], meaning that we still borrow more revenues than we get from taxes. [1] http://news.investors.com... [2] http://www.investopedia.com... During a recession I want the government to have an expansionary fiscal policy. In a recession, people are afraid to spend money. This is commonly referred to as a "liquidity trap" because they expect aggregate demand to keep falling [3] so they hoard their profits. Our economy is driven by consumption / demand [4]. If people have more money, due to government spending (let's say in the form of increased gov. worker wages or new government jobs) then those people have more money to spend. More money to spend means more demand for goods and services in the economy. More demand for goods and service means that business owners need to hire more people to keep up with this new demand. By hiring more people, those people get wages and the unemployment rate drops. Okun's law states that for every 1% drop in unemployment, real GDP will be 2% higher. [5] [3] http://en.m.wikipedia.org... [4] http://m.policymic.com... [5] www.investopedia.com/terms/o/okunslaw.asp The economy isn't failing, but it's slowly growing. We've had about 2% GDP growth following the 2009 recession which is slower than the average historical GDP growth (about 4% per year) [6]. The way to quicken the pace of this GDP growth is to convince people who are afraid to spend money to start spending money because it causes a huge ripple effect throughout the economy like a huge wave of demand. Without this demand, businesses suffer and GDP suffers. [6] http://data.worldbank.org... "The US can't increase it's debt or the government will fail." Historically, we've been in debt for years. It's simply not true to say that we'll fail because we can't increase our debt. Our debt/GDP ratio is around 103%. Our debt/GDP ratio was 120% after WWII and we successfully dropped our debt to a surplus during the Clinton administration [7]. Also, Japan has over a 200% debt/GDP ratio and they're the world's third largest economy and had passed our current debt / GDP ratio in 1999. [8] [7] http://www.usgovernmentspending.com... [8] http://www.tradingeconomics.com... (set minimum year to 1996) "You need to rework your math. If I run a grocery store, and I have 10 tomatoes, is it possible for me to sell 20?" Money, unlike tomatoes, doesn't need to physically exist before using. The majority of our money is made in the computers of banks and "poofed" into existence by a digitized banking matrix [9]. The other portion of those numbers are physical dollars which hold the same value as these digital numbers because they both represent money. [9] http://livescience.com... Money can be borrowed on credit. If I take out a loan for my new house I don't need to pay the banker all of the money up front. I promise to pay him back in the future with interest on the initial amount that I've borrowed. We should continue expansionary fiscal policy during a recession. As long as government spending continues to spread more money throughout the economy, there will always be more demand. Our economy is driven by demand. The reason why expansionary policy should only continue during a recession is because there's no "crowding out effect" on the private market meaning that government borrowing isn't competing with private business' ability to borrow funds because our economy isn't operating efficiently during a recession. [10] [10] http://www.economicshelp.org...