Government Austerity & Job Creation
May 29, 2015 11:30am by Barry Ritholtz
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Along Came Pollen
austerity is just a political game both parties play as long as thew blame can but put on the other party
I would disagree, it is a particularly Republican idea akin to “starving the beast” rhetoric.
Exactly; GOP since the Reagan is the only party that demands austerity when the opposite party is in the white house, but borrow and spend like drunken sailors when they themselves are in the white house. That is what is so despicable about them. They know that they are hurting millions of americans but they don’t care because they also know that a bad economy hurt the party of the president.
Austerity has come to have a rather bad name of late, although it is hard to find a lot of austerity in the Federal Budget of $3.7 trillion (up from $1.8 trillion when Clinton left office….or about $0.9 trillion adjusted for inflation). The money was spent…perhaps not wisely and perhaps not on hiring more people (and reducing unemployment), but it was spent. If the government hired two people to do the work of one it would have helped the employment number, but would the country be better off? Wouldn’t it be better if government got more efficient and did the same or more with fewer people? Not the way Washington thinks of things.
This is though, only if the “crisis” level spending had been continued without any disruptions. Government spending is essentially moving at the same speed it did in the 00’s before the crisis. This spending was of course going to fall just in part of recovery.
Was this data and report published by Paul Krugman? Seriously – he’s been right about most things in last 15 years…
The resulting desultory economic expansion and job growth also means no boom, and more importantly, no bust. So far. No real signs of recession, either.
Of course government is part of the economy. Not a drain as some propaganda goes. The whole idea to starve government to a size it can be drown in the bathtub is really all about eliminating the sheriff in town so the bad guys can do their own thing unopposed. But to be fair most of the government job cuts came from state and local governments. I know in Florida where I live when real estate went bust so did property taxes which funds most of local government. The state government is mostly funded by sales tax which of course fell when the economy contracted. People have been trying to modify how the state is funded to make it’s revenue more stable but the sales tax is so perfectly regressive the special interest will not have it. The cuts in government jobs were not a plot but the result of how the taxes that fund various government are design.
In previous recessions state and local government have gone to the federal government and gotten help such that they didn’t have to cut jobs and deepen the recession. This time they did not get that help (beyond the 2 year stimulus) and were forced to make these cuts.
I guess the reason this failure of government jobs has not had more serious consequences, is the slowdown in growth of the workforce. The final outcome is that GDP growth will be less.
http://www.calculatedriskblog.com/2015/05/business-executives-are-not-experts-in.html
I agree that the USA population is growing slower than it’s historic average and that will drop our GDP growth. But immigration is the wild card. If we can get enough of the Xenophobia out of congress we can increase immigration and counter that.
The problem is that the Xenophobia is part of the basic tribalistic strategy of the GOP. How do you get below average income people to support the party of the millionaires – just create a faux danger of “foreign invaders” and they will all stand together with those that promise to fight the invasion. Look at right wing media, its all about scaring poor white people and convincing them that the only party that will fight to protect them (against IS, mexicans, satanists, etc.) are the GOP. When low information people vote, tribal identity is all, and you strengthen it up by creating outside dangers.