Tax and Budget Cutting Don’t Create Jobs
July 19, 2011
This entry is from Steve Kreisberg, AFSCME’s Director of Collective Bargaining.
While Washington and the national media are transfixed by the partisan conflict over raising the debt ceiling and reducing the federal budget deficit, the rest of America struggles with unemployment and the effects of Draconian budget reductions on state and local government services. It is becoming increasingly clear that there are two competing visions of America: one is of a recovery from the economic damage inflicted on our economy – by reckless Wall Street bankers – based on investment in services, infrastructure and education. The alternative vision argues that we should continue to follow economic policies that bestow the wealthiest members of society and corporations with greater tax advantages, in the vain hope that jobs will somehow materialize if corporations add to their record levels of profits.
The most obvious problem with the tax cutting approach is that it has not worked. It has been 10 years since the massive Bush administration tax cuts were enacted. Yet there was net employment growth of just 2.5 million jobs during this 10 year period, despite the fact that the labor force has grown by 10 million. And income has grown increasingly unequal during this period, which further depresses economic activity.
But the current fixation on deficit reduction won’t create jobs either. Social security cuts won’t create jobs; Medicare and Medicaid spending reductions won’t create jobs. Continued cuts to state and local government workers and compensation mean fewer jobs for them and for their community, as there is less economic activity. These deliberate efforts to starve the public sector are taking their toll: the meager job growth of 57,000 in June was offset by the loss of 39,000 jobs from the public sector. And the Department of Labor reports that wage levels for those with jobs actually fell in June which is a very troubling sign.
Indeed, the latest economic setback can be tied directly to the fiscal austerity policies promoted by the likes of Governors Snyder (Michigan), Walker, (Wisconsin) Kasich (Ohio) and others. Entering into 2011, the economy was picking up steam, but when these politicians came to town with their circus act of attacking workers, their jobs and their pay, the economy started to tank. Compare and contrast: from November 2008 to April 2009, the economy lost more than 500,000 jobs each month (the economy actually lost 750,000 jobs each month In January, February and March of 2009). As the new Obama administration’s stimulus efforts took effect, the economy began to grow and add jobs. Starting with small gains in November 2009, and slightly stronger growth throughout 2010 and into the first quarter of 2011, efforts to invest in America to create economic activity and jobs paid off. But, in the second quarter of 2011, as the Republican agenda of austerity and attacking collective bargaining took hold, economic and job growth began to stall.
As the latest jobs report shows, we cannot cut our way to prosperity. Deliberate and focused efforts are necessary to further revive our economy. A singular focus on the deficit is a choice, and it’s the wrong choice for America.
