By almost any measure, the economy is doing better than it was during the devastating recession that hit a few years ago—but by almost any measure, we still have a long way to go. There are things we could, and should, be doing to move us in the right direction—but many of our institutions are actually tossing anchors. The Republican leadership of the U.S. House, for instance, continues to throw another predictable tantrum by refusing to pass a bipartisan Senate highway-funding bill. In a press conference yesterday, Federal Reserve chairman Ben Bernanke described the economic outlook as grim, but declined to add any new measures to remedy unemployment. And new analysis continues to show that public-sector austerity is dragging down the economy.
A new New York Times article details the consequences of hundreds of thousands of lost jobs at the state and local level:
If governments still employed the same percentage of the work force as they did in 2009, the unemployment rate would be a percentage point lower, according to an analysis by Moody’s Analytics. At the pace so far this year, layoffs will siphon off $15 billion in spending power.
But those with disappearing jobs say that the effects are not just economic — they mean longer response times to fires, larger class sizes, and in some cases lawsuits when short-staffed agencies are unable to provide the required services…Businesses can also be hindered by government cuts. They not only lose prospective middle-class customers but may face long waits for services.
A new analysis by economist Adam Hersh from the Center for American Progress suggests that state and local austerity is having a measurably negative effect on the economies of the states enacting these massive cuts. The states that cut the most have a significant gap in employment and economic growth compared to states that haven’t engaged in big cuts—and that carries over to private-sector job performance, too.
Republicans at the state legislative level—and their presidential candidate, Mitt Romney—have pushed for the kind of drastic cuts to jobs and programs that have pounded economies across Europe, as Paul Krugman notes.
The reality is that private-sector job growth has more or less matched the recoveries from the last two recessions; the big difference this time is an unprecedented fall in public employment…It sure looks as if cutting government when the economy is deeply depressed hurts rather than helps the American people.
Of people whose jobs are with state and local governments, the largest portion by far are working in education and public safety. When state, county and local governments cut jobs, that doesn’t trim some fictional category of waste; that means fewer teachers, fewer firefighters, fewer police officers. And the budgets proposed by politicians like Romney and Rep. Paul Ryan would cut federal aid to states, and that means fewer teachers no matter how you slice it. Cutting back on these kinds of services hurts property values in the short term and economic prospects for kids in the long term.
We’ve been saying this for quite a while, of course. When somebody loses their job, it doesn’t matter if they’re a private-sector employee or a teacher, firefighter, librarian or a street-light repairman. They still have less money to spend at their local businesses, they still have a harder time staying in their home, they still enter into the competition for a small number of job openings.
Politicians like Rep. Eric Cantor, the Virginia Republican who serves as House majority leader, are fond of using the term “cut and grow” to describe their magical belief that austerity will unleash economic prosperity. It was dubious before, but it’s a joke now. The strategy has failed, and a full percentage point of unemployment is the only thing Cantor and his allies in state capitals have to show for it.