“…you’ll never get deficits under control if you don’t get growth back on track; you’ll never get deficits under control if you refuse to consider tax increases AND SPENDING CUTS.“

Emphasis added for accuracy.

Interesting you bring up the Keynesian GDP formula. As best I can tell, the way the neo-Keynesians seem to look at it is something like this:

GDP = (P + 0.5G) + I + G + (net exports)

In this expression, the component C is broken down into P (private sector consumption) and the mythical Keynesian multiplier.

My play on the GDP formula is this:

GDP = C + I + (net exports) – (G – (CG + IG))

In this expression, CG is the amount government consumption and IG is government investment. This allows government economic activity to count towards GDP, while representing the true nature of other government spending (such as transfer payments) as a drag on the other factors of GDP.

I believe this GDP formula, or something like it, represents a much truer picture of reality by making clear the zero sum nature of government spending as opposed to other economic activity.

GDP = C + I + G + (net exports)

The bailouts and stimulus of 2008-2009 were something like $800B if I remember right. That would be a (G) figure here.

The question is, how much (C) and (I) does pumping up (G) kill in the process? And, if you still manage a positive GDP after doing that, what kind of real world growth does it promote. Innovative growth of living wage employment? Increased personal and community freedoms? I highly doubt it.

The solution here is for government to quit with the spending spree, get the money supply under control, and put the breaks on the capricious law making and regulation that are leading to continued uncertainty. That solves for growth and deficits.