Obama Stimulus Undermined by Public Sector Layoffs
The American Jobs Act, which will cost $447 billion to create employment, may be offset by the drive of local, state and even federal governments to balance their books. President Obama’s proposal may help small businesses through payroll tax cuts…
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The friction between a federal stimulus and local tax shortfalls cannot be overstated. A sharp drop in property values has lowered municipal and state tax receipts. The president’s plan does nothing about rebuilding the real estate markets. A change in the basic economies of cities like Detroit, cities which have lost tens of thousands of jobs because of a fundamental and unwanted restructuring of the manufacturing economy, will not reverse themselves because of a drop in payroll taxes.
The most troubling thing about monthly national unemployment figures is the constant drop in the number of people in the public workforce. Recent data released by the Census Bureau show that over 200,000 public positions were eliminated last year. That figure grows by the tens of thousands in most months.
An irony of Obama’s jobs proposal is that he means to offset the $447 billion expenditure for the American Jobs Act with cuts in federal spending beyond the $2.5 trillion set last month. That means austerity cuts of almost $3 trillion. Some of that, he and Congress have already admitted, will come from elimination of “redundant” and “wasteful” federal government spending. That means public workers will be laid off, whether their jobs are actually wasteful or not.
It will be impossible to count heads if and when the American Jobs Act begins to stimulate new employment and as federal austerity to pay for those jobs reduces the government’s payroll. The American Jobs Act may add a million new jobs. Another $447 billion taken out of the federal budget may mean several hundred thousand jobs lost at the federal and local level. The addition and subtraction of these positions is too hard to track in an economy as large and complex as that of the U.S.
What is certain is that new private sector jobs will need to be paid for, and some of that money will come from the public sector.
Douglas A. McIntyre
Contact [email protected] for any questions or corrections.
Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.
McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.
His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.
A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.
TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.
McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.
