Oh, boy. President Obama and his supporters will be hearing this line for a while:
“The private sector is doing fine.”
Obama made that remark during a press briefing today about the U.S. and European economies. Now, he and his supporters will almost certainly counter that the line is being taken out of context. Via ABC News’ Jake Tapper, here is that context:
“We’ve created 4.3 million jobs over the last … 27 months, over 800,000 just this year alone,” the president said, “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 of the federal government in dealing with fewer revenues coming in.”
Michael Scherer of Time notes that Obama and the Democrats did not give John McCain the same benefit of context when they pilloried him for his September 2008, mid-financial-panic comment, “… the fundamentals of our economy are strong.” So, to a large degree, turnabout will be fair play.
But let’s give the president the benefit of context. Is he right that the “weakness in our economy” is that Washington isn’t bailing out state and local governments fast enough?
Obama cast the private sector’s alleged strength in the terms of job growth. So, let’s look at that on the public-sector side.
For starters, let’s consider that the states and locals that are cutting jobs, where they are cutting them, because they don’t have the money to fund them. With annual deficits over $1 trillion a year, Washington doesn’t have the money to fund them, either. What Obama is proposing is to borrow more money from China to pay for civil servants in Sacramento (data for April, the latest available state-by-state, show almost a quarter of government job losses were in California).
But even if one is prepared to go along with this bailout, is it really the cure for what’s ailing us?
Federal data for last month show state and local government employment fell by 111,000, or 0.58 percent, from May 2011. Had those 111,000 people still been in their jobs — and here we’re going to give Obama the benefit of the doubt and assume none of them found employment elsewhere, which is a rather big assumption — the nation’s employment level would have been 0.08 percent higher. The national unemployment rate would have been 8.1 percent, instead of the actual rate of …
… wait for it …
… 8.2 percent.
For those 111,000 people and their families, those layoffs were undoubtedly terrible. But as an explanation for the “weakness in our economy,” and as a possible target for efforts to spur economic growth, the reduction of state and local government employment is a complete nonstarter.
– By Kyle Wingfield