The Edmond Sun

Opinion

March 15, 2013

BY THE NUMBERS: The strange allure of austerity

EDMOND — Quiz: Under which president did government employment fall?

a. President Richard M. Nixon

b. President Ronald W. Reagan

c. President George W. Bush

d. President Barack Obama

Judging from the tenor of the public debate, at least here in Oklahoma, I’m guessing few people would select “b” but “d” is the correct answer.

According to the latest data from the U.S. Bureau of Labor Statistics, government employment (at the federal, state and local levels combined) has been steadily increased since 1947. During the Eisenhower administration, 1.7 million government workers were added to the payrolls. Another 3.5 million government jobs were added during the Kennedy/Johnson administrations, and 2.8 million government jobs were created during the Nixon/Ford administrations. The government job growth continued with the Carter (1.3 million), Reagan (1.4 million), Bush (1.1 million), Clinton (2.0 million) and Bush (1.7 million) administrations, too.

But during the Obama administration this growth in government employment not only slowed but reversed course. So far during the Obama administration government employment has actually fallen by 730,000 jobs. In short, President Obama — the oft-labeled champion of big government — has presided over the largest decline in government employment since the immediate post-World War II era.

Granted, this is not likely something that the president views as a success from his administration. In fact, with a number of proposals, including most recently with the American Jobs Act, President Obama has sought to increase the number of teachers, firefighters, police officers, and government construction workers. However, recalcitrant Republicans in Congress have thwarted those attempts.

The real question though is “why”? Standard economic theory predicts that in times of high unemployment that government spending can stimulate the economy. In short, spending money on government jobs can help create private-sector jobs too. We even saw this happen with the 2009 stimulus bill, which the Congressional Budget Office estimates created up to 5 million jobs (in the public and private sectors combined) at its peak. Since that time though, government employment has declined significantly and as a result more people are unemployed today. Yes, the economy has grown and jobs are being created. But because government employment is falling the economy isn’t growing as fast as it otherwise would. It is interesting to note that if government employment had grown at the same pace during these first three years of the Obama-recovery as it did during the first three years of the Reagan-recovery, an additional 1.4 million Americans would be employed today.

Congressional Republicans have wanted to shrink the size of government and as a result more people are unemployed today.

The bad news is that Congressional leaders aren’t willing to soften their stance anytime soon. By eschewing any compromise with the White House, Congress has forced an $85 billion cut in federal government spending (which will grow to $109 billion in cuts next fiscal year) putting less money in workers’ pockets.

This decline in spending likely won’t be enough to tip the economy back into another recession, but it will grow more slowly than it otherwise would. Much like we’ve seen over these past three years where congressional contractionary policy has slowed growth, but not erased it, the sequester’s spending cuts will result in slower job growth than we otherwise would have. Unfortunately, this means more people will remain unemployed longer, and more families will suffer more.

As an economist it’s strange to see this fascination with austerity — this desire from so many on the right to shrink the size of government so much that they will sacrifice jobs and prosperity for millions of families. Sadly, this allure of austerity that has seemingly gripped Congress, will continue to lead us down the wrong economic path.

MICKEY HEPNER is the dean of the College of Business Administration at the University of Central Oklahoma. Hepner serves on the Executive Committee of the Board of Directors for The Oklahoma Academy.

1
Text Only
Opinion
  • Loosening constraints on campaign donations and spending doesn’t destroy democracy

    Campaign finance reformers are worried about the future. They contend that two Supreme Court rulings — the McCutcheon decision in March and the 2010 Citizens United decision — will magnify inequality in U.S. politics.
    In both cases, the court majority relaxed constraints on how money can be spent on or donated to political campaigns. By allowing more private money to flow to campaigns, the critics maintain, the court has allowed the rich an unfair advantage in shaping political outcomes and made “one dollar, one vote” (in one formulation) the measure of our corrupted democracy.
    This argument misses the mark for at least four reasons.

    April 23, 2014

  • The top 12 government programs ever

    Which federal programs and policies succeed in being cost-effective and targeting those who need them most? These two tests are obvious: After all, why would we spend taxpayers' money on a program that isn't worth what it costs or helps those who do not need help?

    April 23, 2014

  • Free trade on steroids: The threat of the Trans-Pacific Partnership

    Many supporters of the proposed Trans-Pacific Partnership, or TPP, trade agreement are arguing that its fate rests on President Obama’s bilateral talks with Japanese Prime Minister Shinzo Abe in Japan this week. If Japan and the United States can sort out market access issues for agriculture and automobiles, the wisdom goes, this huge deal — in effect, a North American Free Trade Agreement on steroids — can at last be concluded.

    April 22, 2014

  • Can Hillary Clinton rock the cradle and the world?

    What's most interesting to contemplate is the effect becoming a grandmother will have on Hillary's ambition. It's one of life's unfairnesses that a woman's peak career years often coincide with her peak childbearing years.

    April 22, 2014

  • Chicago Tribune: If Walgreen Co. moves its HQ to Europe, blame Washington’s tax failure

    The Walgreen Co. drugstore chain got its start nearly a century ago in downstate Dixon, Ill., before moving its corporate headquarters to Chicago and eventually to north suburban Deerfield, Ill.
    Next stop? Could be Bern, Switzerland.
    A group of shareholders reportedly is pressuring the giant retail chain for a move to the land of cuckoo clocks. The reason: lower taxes. Much lower taxes.
    If Walgreen changes its legal domicile to Switzerland, where it recently acquired a stake in European drugstore chain Alliance Boots, the company could save big bucks on its corporate income-tax bill. The effective U.S. income-tax rate for Walgreen, according to analysts at Swiss Bank UBS: 37 percent. For Alliance Boots: about 20 percent.

    April 21, 2014

  • Sulphur a future major tourist destination?

    Greta Garbo says, “I want to be alone,” in the 1932 film “Grand Hotel.” That MGM film starred Garbo, John and Lionel Barrymore, Wallace Beery and a young actress from Lawton named Joan Crawford. It told the stories of several different people who were staying at an exclusive hotel of that name in Berlin Germany.
    It was critically well received and it inspired more recent films such as “Gosford Park” and television shows such as “Downton Abbey” in that it detailed the relationship between powerful and wealthy people and those who served them. The film opened amidst much fanfare and it received the Oscar for best picture in the year of its release.

    April 21, 2014

  • St. Louis Post-Dispatch: Why poverty across the world matters to Americans

    A child starving in South Sudan should matter to Americans. That was the message delivered last week by Nancy Lindborg, whose job at the U.S. Agency for International Development is to lead a federal bureau spreading democracy and humanitarian assistance across the world.
    That world has reached a critical danger zone, with three high-level crises combining military conflict with humanitarian catastrophes affecting millions of innocents in Syria, the South Sudan and the Central African Republic.
    But back to that child.

    April 18, 2014

  • Government leadership complicit in overfilling prisons

    One of the thorniest problems facing any society is the question of what to do with transgressors. Obviously, the more complicated a culture becomes, the more factors come into play in trying to figure out what to do with those who choose not to “play by the rules.”

    April 18, 2014

  • My best days are ones normal people take for granted

    It is a weekend for working around the house. My fiancee, Erin, and I have the baby’s room to paint and some IKEA furniture to assemble. I roll out of bed early — 10:30 — and get into my wheelchair. Erin is already making coffee in the kitchen.
    “I started the first wall,” she says. “I love that gray.” Erin never bugs me about sleeping late. For a few months after I was injured in the Boston Marathon bombings, I often slept 15 hours a day. The doctors said my body needed to heal. It must still be healing because I hardly ever see 8 a.m. anymore.

    April 18, 2014

  • Instead of mothballing Navy ships, give them to our allies

    A bitter debate has raged in the Pentagon for several months about the wisdom of taking the nuclear aircraft carrier George Washington out of service to save money. The Washington, at 24 years old a relatively young vessel, is due for a costly refit, a routine procedure that all of the 11 large carriers in service undergo regularly.

    April 18, 2014

Poll

Do you agree with a state budget proposal that takes some funds away from road and bridge projects to ramp up education funding by $29.85 million per year until schools are receiving $600 million more a year than they are now? In years in which 1 percent revenue growth does not occur in the general fund, the transfer would not take place.

Agree
Disagree
Undecided
     View Results