Government job cuts add drag to recovery

WASHINGTON – Conservative Republicans have long clamored for government downsizing. They’re starting to get it – by default.

Crippled by plunging tax revenues, state and local governments have shed more than a half-million jobs since the recession began in December 2007. And, after adding jobs early in the downturn, the federal government is now cutting them as well.

States cut 49,000 jobs over the past year and localities 210,000, according to an analysis of Labor Department statistics. There are 30,000 fewer federal workers now than a year ago – including 5,300 Postal Service jobs canceled last month.

By contrast, private-sector jobs have increased by 1.6 million over the past 12 months. But the state, local and federal job losses have become a drag on efforts to nudge the nation’s unemployment rate down from its painfully high 9.1 percent.

The economy has been expanding, at least modestly, since the middle of 2009. And state and local governments are usually engines of job growth during recoveries. But not now, said economist Heidi Shierholz of the labor-aligned Economic Policy Institute.

“The public sector didn’t start to lose jobs right away. But then it did as the budget crunch really hit. State governments are not allowed to run deficits. So the private sector is expanding while the public sector is shedding jobs – to the tune of 35,000 jobs a month,” she said.

President Barack Obama sought to ease the crunch by including $35 billion to prevent layoffs of police, firefighters and teachers in his $447 billion jobs package. But that big bill hit a GOP wall in Congress.

Efforts to pass what Obama called “bite-sized pieces” of the big bill have stalled, too. Republicans don’t want to swallow them, regardless of the serving size. Senate Republicans blocked the $35 billion installment late last week when Democratic leaders called it up as stand-alone legislation.

The dynamic is already reverberating through the gathering presidential campaign cycle, with Republicans making an issue out what they depict as Obama’s inability to turn the economy around. This has been driven home in every one of the frequent Republican presidential debates, and is certain to become even more intense as the GOP field narrows. The weak economy is a main factor in Obama’s current approval ratings, the lowest of his presidency.

No sitting president since Franklin D. Roosevelt in 1936 and 1940 has been elected with the unemployment rate as high as it stands today – hovering near or above 9 percent for more than two years. In 1936, the rate was 17 percent and in 1940, 15 percent, but then it was on a downward trend from more than 24 percent earlier in the Great Depression.

Ronald Reagan’s durable 1980 campaign slogan that government “is not the solution to our problem, government is the problem” is a cherished GOP refrain. Most recently, it’s been echoed in tea party calls for smaller government.

Yet the federal bureaucracy grew by leaps and bounds during Reagan’s eight years in office – and under every Republican and Democratic president since.

Cities and counties are hampered by lower property tax revenue because of collapsing real estate values. States are hurt by lower income and sales tax revenue because of the deep recession and stubborn unemployment.

Economists suggest roughly 200,000 new jobs a month – or 2.4 million a year – are needed to significantly lower the jobless rate. It takes from 100,000 to 150,000 new jobs a month just to tread water and match working-age population growth.

All told, since the recession began, local governments have bled 405,000 jobs, state governments 50,000. The federal government has added a net 63,000 jobs after subtracting the more recent losses.