A New View of Austerity?


When it comes to things that bear repeating, thankfully there are bloggers to do the job. After all, if the point doesn’t communicate the first few times, only saturation will suffice. What? Okay, not exactly, but still, there are some things that shouldn’t require such repetition. To wit, Steve Benen:

When a nation tries to recover from an economic downturn, there are a variety of things policymakers have no control over. After the Great Recessions, for example, neither the White House nor Congress could control the Eurozone crisis, a natural disaster in Japan, or unrest in the Middle East.

It’s an unpredictable world with inter-connected economies and volatility often lurking just out of sight. But this realizations only reinforces a lesson congressional Republicans have forgotten: U.S. policymakers should, at a minimum, not make matters worse.

Consider, for example, what unemployment would be if government weren’t trying to create jobs and lay off public-sector workers at the same time.

He’s actually pointing to Phil Izzo’s blog post for The Wall Street Journal, which makes a point that ought to be familiar to all by now:

Federal, state and local governments have shed nearly 750,000 jobs since June 2009, according to the Labor Department‘s establishment survey of employers. No other sector comes close to those job losses over the same period. Construction is in second worst place, but its 225,000 cuts are less than a third of the government reductions. To be sure, construction and other sectors performed worse during the depths of the recession, but no area has had a worse recovery.

A separate tally of job losses looks even worse. According to the household survey, which is where the unemployment rate comes from, there are nearly 950,000 fewer people employed by the government than there were when the recovery started in mid-2009. If none of those people were counted as unemployed, the jobless rate would be 7.1%, compared with the 7.7% rate reported on Friday.

What’s that? Well, it’s one of those weird issues that stays in the background no matter how important it actually is, regardless of how often it is actually thrust into the spotlight.

Perhaps you remember the woeful tale of Willard. He’s this guy who actually ran for president last year. You might recall some of his greatest hits, like “The Road to Greece”. This was a rhetorical piece accusing President Obama of wanting to turn the United States into a European socialist paradise, and just look where that got Greece. It’s the sort of thing one can take down over and over again. And over. And again. And yet, despite all that, it keeps coming up.

Does it matter that the point was neutered months before? Nope. From the outset, it was the sort of point Mr. Romney loved to make:

In a line that got a laugh from the audience, Romney predicted that the president’s reelection committee will have to change some of the visual aspects of his second acceptance speech as well. “One thing I am convinced that you are not going to see at the Democratic Convention,” he said. “You are not going to see President Obama standing alongside Greek columns. He is not going to want to remind anybody of Greece” – a country deeply in debt.

“With trillion-dollar deficits each of the years he has been in office, with forecasts of huge deficits down the road, this is a president who is putting in peril our economic future,” Romney said.

The punch line, of course, is that conservative-style austerity is what causes problems in Greece and the Eurozone.

If you missed Mitt Romney’s Grecian formula, perhaps you might recall an episode from June:

At one point, a reporter asked, “What about the Republicans saying that you’re blaming the Europeans for the failure of your own policies?” Obama responded:

“The truth of the matter is that, as I said, we’ve created 4.3 million jobs over the last two, 27 months—over 800,000 just this year alone. The private sector is doing fine. Where we’re seeing weaknesses in our economy have to do with state and local government, oftentimes cuts initiated by, you know, governors or mayors who are not getting the kind of help that they have in the past from the federal government and who don’t have the same kind of flexibility as the federal government in dealing with fewer revenues coming in.”

Reporters figured Republicans would seize of the notion of the private sector “doing fine,” so pretty much every other word uttered during the press conference has been deemed irrelevant. Now, the “gaffe” is what matters—include Obama’s important explanation of the policies needed to improve the economy and the damage done by austerity-like measures in the public sector

Sigh.

As gaffes go, this strikes me as extremely weak tea. The choice of words probably could have been slightly better, but really, to treat this as some kind of breakthrough moment in the campaign is pretty silly. Indeed, what Obama said, in context, is largely correct—compared to the public sector, the private sector really is doing fine.

This isn’t complicated. Corporate profits have soared, the stock market is up, and private sector job growth has fueled the recovery entirely on its own. In fact, private sector job growth last year was the second best year we’ve seen since the late 1990s, and 2012 is on track to be even stronger.

The public sector, meanwhile, continues to be a drag on the economy, laying off workers and cutting budgets. Comparing the two sectors, there’s nothing shocking about saying one is “fine” and the other isn’t.

John Darkow, Aug 21, 2010As Benen noted, this isn’t complicated: As the private sector recovered from the storms of 2007-08, corporations amassed some pretty impressive profits and cash reserves. But they weren’t hiring, and the reason is simple: They didn’t have any reason to. Consumer spending stayed down, and this was in no small part because of cuts in the public sector. It’s easy enough to pick on teachers, firefighters, or other public employees as unnecessary, but while cutting public jobs it does little to complain about the lack of hiring at Hot Dog on a Stick. The functional reality is that public employees contribute to economic growth.

And this is the sort of thing that bears repeating.

In July, 2011, the Economic Policy Institute explained:

Economic Policy Institute: Public and Private Sector UnemploymentIn total, the public sector has lost 430,000 jobs compared to the private sector’s net gain of 980,000 jobs since the Great Recession ended in June 2009—an average of nearly 19,000 jobs each month over that time. Last Friday, the shutdown of Minnesota’s government placed about 22,000 state employees out of work until their budget dispute is resolved. Unfortunately, further budget cuts at the state, local, and federal levels seem to be on the horizon, exacerbating this problem in the U.S. labor market.

And a month later Benen noted:

Since the start of 2010, the overall U.S. economy has added about 1.9 million jobs. The vast majority of these jobs have come from the private sector, which created nearly that many jobs just over the last 13 months, and over 1.1 million jobs so far in 2011.

And then there’s this: state and local governments have eliminated more than 400,000 jobs since the start of 2010.

Every time you hear a Republican official or candidate argue today that public-sector spending is dragging down the economy, remember that this person has the problem exactly backwards.

Layoffs at the state and local level were mitigated in 2009 by the Recovery Act, which saved thousands of jobs that would have otherwise been eliminated. Those funds have since been exhausted, and the public sector is back to making severe layoffs.

This is what David Leonhardt recently described as “an unforced economic error” — with all of the problems we can’t control, this is one problem we know exactly how to prevent. We just choose not to, thanks to the Republicans’ ideology.

Indeed, it’s important to remember that these job losses are, in the eyes of Republicans, a positive development. Under the GOP economic model, the public sector is supposed to lose jobs, and as part of the party’s austerity agenda, this is a problem that must get worse on purpose.

It seems almost strange that the absurd question of whether Republicans are willfully sabotaging the American economy in hopes of winning votes passed without consideration of the merits. That is, the merits of the question. We’ve heard plenty about the merits of austerity, oft-repeated on the chance we’ll watch the birdie and not … um … er … right. Watch the birdie.

Maybe in addition to lawn watering days, we could institute a policy by which the fire departments won’t put out any fires until everyone else conserves water by keeping their showers to three minutes or less. Because, you know, only liberal longhairs take long showers.

Perhaps that is a bit extreme, but it seems a bit useless to complain about unemployment while pushing public policy intended to put people out of work.

It is a point that bears repeating, especially as the Wall Street Journal and New York Times clue in. If you’ve been a public sector austerity advocate, you do not get to complain about unemployment. The difference between where we find ourselves and where one thinks we ought to be is entirely by design. Unemployment could be lower, but the right wing demands that we solve our problems by putting people out of work.
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What? Lather, rinse, repeat. And then leave the conditioner in for three to five minutes! How wasteful!

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