Something sinister must be happening over at Murdoch's Wall Street Journal (could it have to do with the ongoing criminal investigation in the UK?). Somehow they've allowed the truth of the past year's government spending cuts to be written in one of their official WSJ economic analysis blogs. Without layoffs in local governments (eg, teachers, firemen, police officers, and other vital public services), the unemployment rate would be a full percentage point lower than it is today, at 7.1%.
There's also a handy chart:
Looking at the data, they come to the undeniable conclusion that spending cuts hurt employment:
In April the household survey showed that that there were 442,000 fewer people working in government than in March. The household survey has a much smaller sample size than the establishment survey, and so is prone to volatility, but the magnitude of the drop is striking: It marks the largest decline on both an absolute and a percentage basis on record going back to 1948. Moreover, the household survey has consistently showed bigger drops in government employment than the establishment survey has.So if the government had stayed exactly the same size as it was on December 1, 2008, we would have significantly lower unemployment than we do now. If we had increased the size of the government more than we did with the stimulus--through, say public works projects, increased funding for schools, and other simple, intuitive measures---unemployment could be even lower still. But instead of taking steps we know to have remedied economic problems in the past, Congress started cutting government spending because of the GOP's irrational fears about temporary increases in our public debt--something we've known since the early part of last century has a negative effect on the economy in a recession.
The unemployment rate would be far lower if it hadn't been for those cuts: If there were as many people working in government as there were in December 2008, the unemployment rate in April would have been 7.1%, not 8.1%. [my emphasis]
This should be front-page news, and Paul Ryan and his fellow Rand-devotees (the whole Republican Party nowadays) should have to answer for it this fall. While economists and liberals have comprehended the fact that cutting government spending in a recession causes problems for the economy. But now we have data that directly invalidates their screw-you-I've-got-mine, libertarian ideology, evidence that is now so undeniably clear that even the pro-austerity Wall Street Journal can't deny its truth: Budget cuts increase unemployment. This needs to be the mantra of every Democrat running for office this fall, and it should be repeated by every liberal on every Sunday morning talk show. Budget cuts during an economic crisis hurt the economy. This is a truth that liberals should not shy away from, and it needs to be something the Dems in Congress refuse to compromise on: Cutting government spending when we need it most just means people get fired from their jobs--that is its primary effect--and that is a terrible thing to needlessly inflict on a country that's still reeling from the deepest recession since the Great Depression.