This is the Cato Daily Podcast for Monday, December 6, 2010.

I'm Caleb Brown.

Consumer spending is an important part of the economy, but should that be the sole focus

of policy makers seeking to jumpstart the economy?

Cato Institute Senior Fellow Dan Mitchell believes Keynesian pump priming in the form of stimulus puts the cart

before the horse in terms of sustained economic performance. We spoke last week.

When people watch news coverage about the economy, there is the refrain over and over 70% of the economy it's consumer

spending we got to get that consumer spending back up these are policies to

get that consumer spending back up and And that's what we hear.

Everyone assumes consumer spending

as the driving force in the economy,

but that puts the cart before the horse.

Consumer spending is a reflection of a good economy.

It's not the cause of a good economy.

And I think some politicians in Washington

deliberately misinterpret that statistic

because they use it as a rationale for Keynesian so-called

stimulus programs. The idea that government's going to spend a bunch of money,

it's going to go into the pockets of consumers who will then go out and spend the

money.

Well, the problem is that that misinterprets what causes growth.

How do Keynesians see it?

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