the spending is still part of GDP. So maybe GDP doesn't contract ?

That's what I was thinking. The spending is simply redirected. What are the effects? Government spending goes down. Personal spending for insurance goes up. Result should be a wash for the insurance companies.

The next leg may be SNAP. Government spending for SNAP goes down. Personal spending for food goes up. Those who consume will have less money for, in the example discussed earlier, liquor and smokes. For those without any discretionary money at all, motivation to work more hours, replacing the illegals that are being rounded up.

A whole lot of economic activity, over the last 40 years, has been juiced by drawdown of savings, and accumulation of debt. If the objective was to reduce the accumulation of debt, a lot of consumption would need to be curtailed. It is unhelpful, however, if spending cuts in one sector are offset by increased spending, or revenue cuts, in another sector. That process is "Rant 37": wealth transfer.

Steve