Thu, Aug

Trickle-Down Austerity

FEDERAL CUTS IMPACT CALIF - When the big stimulus came out, we complained about the relative paucity of aid to states.  When state budget deficits ballooned across the country, we complained about the lack of state aid.  Heck, even the Economist said that there should be more aid to states.


But, another round of state aid would never come to pass.  And as a consequence, public sector job cuts are now a big part of the looming (and possibly already occurring) double-dip recession:

This is what austerity feels like.

In another setback for the economy, the unemployment rate in June rose to 9.2 percent, its highest level since December 2010, the Labor Department reported.

A measly 18,000 jobs were added in June, carried by an increase of 57,000 jobs in the private sector but dulled by losses of 39,000 jobs in the public sector.

As government stimulus winds down and states move to close massive budget gaps, public sector cuts should continue to grow, labor market experts say.

While the overall picture painted in the report is gloomy, the bigger story may lie in cuts on the government front. In June, local governments reported job losses of 18,000, and the federal government shed 14,000 jobs.

Nearly 100,000 local government employees have lost their jobs so far this year, and 464,000 have found themselves jobless since local government employment peaked in September 2008.

Meanwhile, private sector employers, who cut jobs at a more rapid pace earlier in the recovery, have slowly added jobs. Since March 2010, when private sector employment rose for the first time in more than two years, private employers have added about two million employees to their payrolls.

And since the Tea Party held the nation hostage, only to mostly vote against the debt ceiling legislation that was essentially a Democratic cave, cuts will trickle down.  Across the intertubes, reports speculating about how each state will fare in the cuts are appearing.  

Here in California, Dan Walters took a look at the impact of federal spending on the state budget

According to state Department of Finance records, federal funding accounts for about $76.7 billion, or nearly 38 percent, of total state spending in California.  California Senate President Pro Tem Darrell Steinberg said before the debt deal was announced Sunday night he was concerned about cuts to entitlement programs, especially if they reduce payments to the states for Medicaid, which provide health care for the poor and disabled. The state's version is known as Medi-Cal and covers 7.5 million people.

"I think it was a tragic decision to completely balance it on the back of discretionary programs," Rick Mockler, executive director of the California Head Start Association, told KCRA 3. "There was a big conversation for weeks about taking a balanced approach, meaning that there would be some cuts, but there would also be some new revenue. To us, that made a lot more sense."(Link)

Of course revenue would have made a lot more sense, but when you are negotiating with a zombie death cult, logic isn't even part of the discussion.  Good public policy goes out the window for the sake of one policy goal, and one goal only: the lowering of taxes.  

The Zombies from Planet No hardly concern themselves with the issue of actually stimulating the economy, instead relentlessly hewing to an ideology that would even scare Reagan.

And yet with the deal we made this week, we can all be assured that more cuts will be heading to Sacramento on a budget that is already had more chunks taken out of it than a member of the Donner Party.  

It is an austerity that simply shouldn't be permitted in a nation that is still, by far, the wealthiest in the world.

(Brian Leubitz is a former attorney and the founder of Calitics.com where this column was first posted.) -cw

Tags: austerity, trickle down, recession, double dip recession, government stimulus, Tea Party, jobs, jobless

Vol 9 Issue 62
Pub: Aug 5, 2001