Threat from mounting public job losses tested Obama’s economic strategy

“They were nervous,” said Rep. George Miller (Calif.), the top Democrat on the House Education and the Workforce Committee. “As much as they knew you had to engage in this kind of spending, as much as they knew you had to not let the economy ruin the education system, it’s a tough one when all the attention is on the deficit.”

The tide started to shift in the spring of 2010, when it became clear that without additional federal action, hundreds of thousands of teachers could lose their jobs. Obama publicly called for $50 billion in more aid. Republicans balked, but Obama ultimately succeeded at getting a little more than half that amount.

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A look at state and local government jobs compared to job recovery overall

Gallery

The White House economic team: These leaders are key advisers to President Obama on economic issues.

‘Long-term effects’

But the aid was insufficient to meet the needs of states and localities. In 2010 and 2011, they cut 457,000 jobs.

“Federal aid mitigated the harmful effects of the spending cuts in the early years of the budget crunch, but its expiration last year had a catastrophic effect,” said a report released this month by the left-leaning Center on Budget and Policy Priorities (CBPP).

The impact of the cuts was most visible in education, where states and localities cut 178,000 jobs. As a result, according to the American Association of School Administrators, many schools increased class size, eliminated summer programs, shortened the school week to four days or shut down altogether. Some states have cut funding for higher education in half.

Beyond education, dozens of states have cut funding for services for the elderly and disabled and for emergency service providers such as police and firefighters.

Experts worry that the cuts will have lasting effects.

“There’s a big body of research showing that a lot of the things that state and local governments spend their money on have long-term effects on the economy and society as a whole,” said Nicholas Johnson, vice president for state fiscal policy at CBPP. “Cutting school funding now can hurt the education of a future workforce.”

Moreover, job losses in state and local government hit a workforce that is disproportionately composed of women and minorities.

With the economy stagnant, Obama asked his advisers in August to assemble another plan to boost the economy. Independent economists and officials at the Federal Reserve agreed that local and state job cuts were holding back the recovery. But Obama’s team did not plan to include a proposal to address the problem.

When Obama asked why, his advisers answered that Congress would never agree to more aid.

But Obama instructed them to insert a $35 billion aid plan into the proposal anyway. In the fall he made a speech to a joint session of Congress, saying the layoffs of teachers were “unfair to our kids. It undermines their future and ours.” Then he went on a bus tour to promote the plan.

It went nowhere in Congress.

In the past few months, as the overall economic recovery has tried to pick up steam, states have stopped losing jobs and added a small number of positions. But economists say losses are likely to continue at the local level.

Jason Furman, a top White House economic adviser, said the administration is continuing to push for action — even if Congress will not go along.

“We’ve signed two rounds, and we’re pushing for a third round,” he said. The aid has been “substantial,” he added, “but still less than we wanted.”