Doesn't all the war spending stimulate the economy?

Dear Dr. Dollar:
Doesn't all the war spending stimulate the economy? And shouldn't the Bush tax cuts do the same? So why are we falling into recession?—Caitlin Young, Whitehall, NY

Neither war spending nor the tax cuts are able to overcome serious weaknesses in the U.S. economy.

Yes, this combination of war spending and tax cuts has created a federal budget deficit—a situation in which the federal government is spending more than it is taking in as taxes. And in times of weak economic growth, a deficit does tend to promote expansion because the government is increasing demand for goods and services with its spending more than it is reducing private demand through taxes. The use of a federal budget deficit to counteract an economic slowdown is the central policy insight of Keynesian economics and has been a generally accepted practice since the 1930s.