We agree then, to get true picture of GDP subtract off that deficit spending. The economy is shrinking....
Not exactly.
You could argue the economy is shrinking because our official measure of inflation understates it, and once that is factored in, we actually have been experiencing flat or negative growth.
We don’t really count borrowing in measuring any of the GNP components, and borrowing is not new to us or other governments. Even if we go into debt for it, when a bridge is built, a bridge is built.
Is the output of the private sector shrinking? I think that’s really what you’re getting at. A case could probably be made for that, but deficit government spending isn’t the best place to go in building that case.