From the comments, Garett Jones writes:
Here’s a simple neoclassical explanation for the high G (government purchases)–>Low Y (GDP) relationship:
More high-paying government jobs–>
More people waiting in line for those good jobs–>
Less private-sector employment.
Queuing for good Davis-Bacon jobs is what creates the problem.
It’s a new twist on the Cole and Ohanian story of high wages worsening the Depression, and Quadrini and Trigari told it in the Scandinavian Journal of Economics as well as here…
There is more at the first link. I am pleased to report that I have the honor of sharing a corridor with Garett Jones.