Obama’s press conference: The public sector isn’t fine

at 01:08 PM ET, 06/08/2012


(Data: BLS; Chart: Ezra Klein)
President Obama’s press conference today was meant to make a simple argument: Given the risks posed by further deterioration in the euro zone, it would be smart for Congress to take out some insurance for the American economy by expanding the payroll tax cut, boosting infrastructure spending and giving more aid to states.

If my Twitter feed is any indication, though, the political story coming out of the conference is that Obama said:

We’ve created 4.3 million jobs over the past 27 months. The private sector is doing fine. Where we’re seeing problems is with state and local government, often with cuts initiated by governors or mayors who are not getting the kind of help they’re accustomed to from the federal government.

Did you catch that? If you just take the audio of Obama saying “the private sector is doing fine,” you could perhaps use it to run an ad against the president.

I don’t, for the life of me, understand why people get so excited over things like this. Is there any evidence that either campaign is having trouble coming up with enough damaging quotes, out-of-context comments or grainy video clips to populate their attack ads?

Nor do I understand why the media see it as part of their job to police the statements of politicians for comments that opposing campaigns might find helpful. Remember: In any speech where a politicians makes a “gaffe,” he or she also made a point. Probably more than one. Mitt Romney, for instance, was making a serious point about the health insurance system when he said “I like being able to fire people who provide me services.” But the public learned a lot more about his gaffe than about his health-care policies that day.

But let’s look at Obama’s comments another way: Are they true?

Since Obama was elected, the public sector has lost about 600,000 jobs. If you put those jobs back, the unemployment rate would be 7.8 percent.

But what if we did more than that? At this point in George W. Bush’s administration, public-sector employment had grown by 3.7 percent. That would be equal to a bit over 800,000 jobs today. If you add those hypothetical jobs, the unemployment rate falls to 7.3 percent.

Both of those numbers, it should be said, are holding all else equal: If more workers had reentered the labor force, the unemployment rate could be higher. And if there were 1.4 million more Americans with jobs, they’d be spending money and creating jobs for other people. So private-sector employment could be higher, too.

Speaking of private-sector jobs, at this point the Obama presidency is net positive on private-sector jobs. Since February of 2009 — remember, Obama wasn’t president for most of January — the economy has added, on net, 780,000 private-sector jobs. Hence the president’s comments: The private sector’s job creation machine is basically working, even if it would be nice to see it working faster. The public sector, conversely, has been losing jobs.

As a disclaimer, these numbers don’t tell you very much. The bulk of the job losses came in early 2009, when Obama had just entered office and when his policies hadn’t yet taken effect. Blaming him for what happened to the labor market in, say, March of 2009 is like blaming a firefighter for the damage the fire causes as his truck is pulling up. And even at this point in his presidency, the economy is driven by much more than his policy preferences. Europe, for instance.

That said, the place where you can most fairly blame the government for the shape of the labor market is in public-sector jobs. The federal government can choose to hire, fire or hold employment steady. It can give states money to keep emmployees on the job, or it can withhold that money. So the fact that the public sector is losing jobs isn’t just a problem, but a problem that the federal government could, with 100 percent certainty, fix. Today’s press conference wasn’t about whether the private sector is fine. It was about whether Congress could do more for both the private and public sectors. And that’s what we should be talking about.

 
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