A few reasons, not all businesses sell directly to the consumer market, this is where the government can influence the economy, construction, defense, other contracting, etc. etc., not to mention, government hiring, this results in people being hired, because as companies gain contracts, or government expands, they need more workers, this results in people having more income and a greater ability to spend, this fuels consumer spending, because when someone has a stable source of income, they are more willing to buy, this encourages companies to produce goods and services, and as demand grows, even expand production and investment, meaning more jobs.

Right now, deficits aren't the big problem, we can still count on other people picking up our debt, so for the time being, we can continue to deficit spend our way out of the recession, later we will have to address the deficit issue, but right now is not the time.

Business hiring has never been independent of their ability to sell their product, their forecasts are forecasts of demand, demand forecasting is based on previous demand, take a class in strategic operations, you'll see the forecasting models are dependent on past performance and the most recent is typically the most important.

The thing is, the government has been already doing this.  The government is a fairly sizable percentage of the GNP as it is now.  It has been.  The problem is that the government work you propose isn't sustainable.  It is like the census work.  What needs to happen is the economy needs to naturally produce jobs that are part of the ecosystem normally and needed to function in the eocnomy, or they don't last.  While what you are saying is true, your solution isn't one that is sustainable.  About the ONLY sustainable thing would be to hire people to upgrade the infrastructure and somehow hope that makes a difference (like it did with the Internet).  But, you know what, that is done through pork normally?

At what point do you say enough is enough with the government getting involved here, and having things take care of itself?  The problem with government spending is that it is an outflow of cash and not an intake of cash, so you drive deficit spending up much further, and consume future money.  Eventually either there is a default solution, or the government begins to crank out cash to pay the debt, and thus there is hyperinflation.

I will also say, if there is deflationary pressure, it is because everything is too expensive, and not at a sustainable price.

Census is known to be short term it happens once a decade, most government work is more long term a few years at least, the economy will only naturally product jobs, if there is something driving job growth, consumption, technological innovation, private investment, etc. but those drivers are not operating at the moment, this is the problem with this recession compared to most recessions, this is why the Government expenditure is a must.

If things could take care of themselves then I would say time to pull back on spending, but they won't that's what you aren't getting, if we pull back now, the bottom will fall out because there is nothing to keep it going on its own.

I’m not really cautioning against inflation or deflation, I’m arguing against a massive debt-drive economic crisis (or collapse). The debt-to-gdp ratio of the United States is (roughly) 90% right now, the deficit is (roughly) 10% of GDP, and there is little reason to believe that the deficit is under control (or could be reduced in the near future if anyone wanted to reduce it). With how ineffectual stimulus spending has been, it is highly likely that the US debt to GDP ratio will hit 200% before the deficit is addressed at the current pace. If investors actually start expecting their return on bonds to cover the risk the high debt levels of the US will create an awful feedback loop because every 1% increase in interest rates will translate into a 1% to 2% increase in the debt-to-gdp ratio; and the only options the United States would have are extreme spending cuts or monetizing of debt.

See that's where I disagree, government expenditure has been extremely effective, you forget how bad it nearly was, we had a bad recession yes, but the economy is growing, albeit slowly, we didn't have a depression, we didn't have an economic collapse, so the government spending succeeded.

The big debt buyers for this country aren't stupid,  heck some of the biggest debt holders is the government, and others are countries who are dependent on our economy, so the concern about the high risk levels is overblown, they'd kill themselves along with us, so it won't happen.

Right now we have to prioritize recovery over the deficit.

Ok, this is how the game of economics works:  Individuals A provides goods and services to individual B.  Individual B then must of provided goods and services at some point to give A money.  Now, without this arriving naturally, which also could be by the assist of loans from the government or individuals, then if individual B an individual that is propped up by government to merely consume that which is by A, then when B happens to no longer get government money, then A doesn't have anyone to keep buying his goods and services, and thus, goes out of business.  The government spending is short term.  B has to add something to the ecosystem of the economy or once they are gone, they it isn't sustainable.

If you keep playing this game, eventually it is going to collapse, much the way the Soviet economy did.  Once the government stopped creating jobs, the entire economy there collapsed, and unemployment shot up like crazy.  But, it happened because the Soviet economy wasn't sustainable. 

There is also far too many presumptions being made, like somehow this is just something short-term that will be ridden out if you just keep pumping things up.  Well, we look at globalization, and that has resulted in a flow of money out of the United States.  So, you can face a case where your propping up merely creates jobs in India or China.

The transfer of goods and services and money is only part of what economics is.

And government spending isn't short term much of government spending occurs over the long term, which is why we tend to have deficits for many years in a row, because the spending is at similar levels every year.

It'll only collapse at a point where there is no one to buy the debt or their demands for buying the debt become too high, we are no where near that point, right now, our debt is bought up readily.

Actually globalization hasn't just been a flow of money out of the US, a lot has come into the US, the problem has been for lower and middle skilled workers in the US, who have suffered due to the  competition from workers in other countries who have workers of similar skill willing to work for far less.  They have suffered as a result of globalization, but that is expected.

I understand where you're coming from, but your fears are overblown, right now, government spending is a necessity, and we still have a good deal of time left to address the debt.  Priorities, first recovery, then the debt.

There are only two reasons the US bond market continues to operate at its current level, investors are concerned about equities and are fleeing to "Safe" investments, and Chinese currency manipulation leaves China with billions of excess American dollars to invest which find their way to the bond market. Any significant shock to the perceived safety of government debt (say the inevitable default of several countries and states) will drive further investment into assets that have real value (precious metals, commodities, real-estate). To make matters worse, any change to the exchange rate in China will also cause a significant shock to the bond market; which means that if America allows China to maintain currency manipulation they will continue to bleed jobs, and if the currency manipulation stops Americans will face higher inflation and/or interest rates.

Or to put it another way, decades of government deficits have created an environment where any action by the federal government will (likely) cause more pain for the American economy. The solution to too much deficit spending and too high of debts is not to increase the size of the deficit and the debt load to buy an additional 6 months of "good times". Effectively that strategy is like paying the mortgage on the house you clearly can’t afford by putting it on your credit card and claiming that your financial problems have been solved.

The thing is, its not going to happen, China is going to continue to have billions to invest for quite some time, as do other countries which are buying our debt, and government debt is still considered extremely safe, it'll be quite some many years, before we have to worry about that.

As for the bleeding of low skilled jobs, its not just China, but dozens of countries which are competing with the US for those jobs, going after China won't stem the tide, this was inevitable.

The problem right now is not high debt and deficit, so your argument is flawed, the problem is the economic downturn, the only solution at the moment is to maintain deficit spending until the economy reaches a point where it can sustain itself, then to begin pulling back spending.  The Debt and Deficit are more long term problems, we should keep an eye on certainly, but trying to solve that will only prevent us from dealing with the current ongoing problem.

You're worried about something that isn't really a problem at the moment and ignoring the thing that is the problem right now.