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ThePlumLIneGS whorunsgov plumline
Posted at 12:41 PM ET, 03/09/2012

Jobs numbers improving? Time for more austerity.

George Zornick makes an important point about today’s jobs report and the improving economy:

There are many reasons for the uptick, from businesses having reached productivity limits, thus requiring the addition of new workers to keep up with increasing demand, to auto manufacturing kicking back into gear after being disrupted by the earthquake in Japan one year ago today.
But the employment situation is getting better for another crucial reason: public sector jobs are no longer being savaged. Over 570,000 public sector jobs have been lost since the recession began, decreasing steadily every month—even though the private sector has been adding jobs since mid-2009. In 2011, the public sector was losing an average of 22,000 jobs per month, but in February only (“only”) 6,000 jobs were lost.
People often talk of outside factors that could derail the fragile economic recovery, from gasoline price shocks, to economic instability in Europe, to another bank failure on Wall Street. These are worrisome yet mostly uncontrollable events.
But a return to slashing austerity cuts at the federal and state level would also retard the recovery — and this is not only a completely controllable policy choice, but one many people in Washington are actively trying to make.

As you’ve heard, Steny Hoyer has been privately negotiating with Republicans on some sort of unspecified deficit reduction package. Hoyer has promised that his top priority will remain jobs. But liberals argue that any pivot back to the deficit at all right now is unnecessary and risks a return to misguided austerity policies that could imperil the recovery at exactly the wrong time.

With Paul Ryan set to introduce a budget in the next couple of weeks, the debate over austerity and the advisability of cuts to government spending will again will be front and center, after a period in which jobs were relatively more central to the political conversation than they were throughout much of last year. Making matters worse, House conservatives are apparently again going to push for extremely deep cuts, possibly even risking another government shutdown fight. And it’s not just Republicans: Even the most modest upticks in the economy are apparently enough to persuade some Dem-leaning thinkers that it’s safe to pivot back to austerity again.

At the risk of absurd oversimplication, today’s jobs numbers would seem to indicate that it’s better for the overall employment picture when the public sector ... loses fewer jobs. That obviously won’t matter to those who prioritize shrinking government over everything else and don’t think public sector jobs count. But it should matter a little bit to those who genuinely see an improved employment landscape as the primary policy goal here.

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UPDATE: Paul Krugman recently offered an economic case against pivoting back to austerity right now.

By  |  12:41 PM ET, 03/09/2012

 
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