Why is Job Growth So Slow?

February 4th, 2011 at 9:06 am David Frum | 45 Comments |

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Partly because – contrary to what you hear – government employment continues to shrink: down 14,000 jobs in January, atop the more than 200,000 net lost jobs in the government sector in 2010. These jobs mostly come from state and local governments, the governments that have grown fastest over the past generation. With stimulus funds running out and little prospect of renewal, we should expect more government-sector layoffs in 2011 as states balance their budgets. Even California will have to follow the trend.

It will be a great irony of our time if the first Obama administration – so universally condemned by conservatives as a socialist, statist binge – turns out to be an era of streamlining and cutback in a bloated local government sector.


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45 Comments so far ↓

  • sdspringy

    OR David, as a result of the socialistic Obama policies at the Federal level 23 additional state Legislatures moved Right.

    And those individuals, following conservative principles, are shrinking the size of State governments. Rather obvious, for a conservative anyway.

  • lessadoabouteverything

    The Federal Keynesian stimulus at the Federal level has been more than canceled out by the anti-Keynesian stimulus at the State and Local level. Perhaps long term it would be a good thing but it would be nice for some Conservatives (outside of Mr. Frum) to acknowledge this is happening. You don’t fire millions of government employees on the one hand, and on the other hand scream that the millions of government workers no longer have jobs.

    Now as to how much of this has been bloat I honestly don’t know. I know in Jersey a lot of roads never got plowed and I remember getting in an argument with a Conservative friend of mine who was screaming that the “wasteful” government did not plow his roads during these recent snowfalls without getting him to acknowledge that if you cut local budgets to the bone there simply won’t be money to plow. Government is always too big except when you need it, and then when it is not there it is still the governments fault.

    • Arms Merchant

      Strawman. Just because government needs to perform some vital functions well doesn’t mean it should do everything. When an organization (i.e., the federal government) tries to do too much, it starts to fail at its core functions. If locals want plowing, they can pay for it, not Joe Sixpack in Florida.

      I don’t know any serious conservative who doesn’t look at federal bloat vs. state and local bloat as separate issues. For one thing, every locality is different. Plus it’s an issue of control. You can probably influence your town council to buy more snow plows, but your power in D.C. is weak unless you are a big special interest. More federal control means less freedom for you.

      That’s why Frum’s article is disingenuous. The federal payroll is at a record high. What does Obama have to do with state workers? For example, California, New York, and Washington state are all paying the price for their previous largess. Washington D.C. has yet to get serious.

      • lessadoabouteverything

        Arms Merchant: Strawman (do you even know what a strawman argument is? A straw man argument is an informal fallacy based on misrepresentation of an opponent’s position but where does Frum do this, in fact you precisely engaged in a strawman argument: Just because government needs to perform some vital functions well doesn’t mean it should do everything.

        Show me where Frum or anyone has said governments should do everything? I challenge and defy you to.

        “That’s why Frum’s article is disingenuous. The federal payroll is at a record high. What does Obama have to do with state workers?”
        OK, show us the figures how this is so. Seriously, but make it for federal payroll of the non Military sector, if you dare include soldiers combat pay in your calculations…
        Of course the Federal Government has a lot to do with state workers, depending on what the Federal government does and how much they transfer funds there.

        forgetn, anti-keynesian stimulus is in fact no stimulus at all though Republicans claim freeing up the local tax dollars to be spent by private citizens is a form of stimulus. Long term maybe, but only if the unemployed state workers have jobs to go to.

        • WillyP

          Here, a whole article written about the expansion of the Federal Government.
          http://mises.org/daily/4946/Is-Big-Government-a-Myth

          “As we’ve seen, the actual numbers show what everybody knows: government at all levels has grown, and in particular at the federal level, since the crisis began, and also since Barack Obama took office. So it’s really not a myth when people complain about the “big government” of Barack Obama.”

        • AndyS

          Actually, Federal employment is very near its all-time low, which it reached at the end of the Clinton Administration. It was MUCH higher during the Reagan years.

          See: http://www.opm.gov/feddata/HistoricalTables/TotalGovernmentSince1962.asp

        • Arms Merchant

          @ lessado

          “…where does Frum do this…”

          He doesn’t. The strawman argument is yours: “You don’t fire millions of government employees on the one hand, and on the other hand scream that the millions of government workers no longer have jobs.”

          “Government” can mean the Federal monster or your county supervisor. You’ve neatly conflated the two in your assertion that conservatives are against “government” when in fact most of us are against the continual expansion of the Federal state.

        • Arms Merchant

          @AndyS

          I wrote that the federal payroll is at an all time high. Related, but not the same.
          http://www.washingtontimes.com/news/2010/feb/02/burgeoning-federal-payroll-signals-return-of-big-g/

        • lessadoabouteverything

          Arms Merchant: “Government” can mean the Federal monster or your county supervisor. You’ve neatly conflated the two in your assertion that conservatives are against “government” when in fact most of us are against the continual expansion of the Federal state.

          Sorry, but Conservatives always seem to be talking about limited Government, if you are in favor of massive State Bureaucracy you are not exactly Conservative. Anyway, what you said did not disprove my contention that you can not complain about government workers being unemployed if you are the one who fires them. Even in flush times that many people losing their jobs at once will cause the rate to spike. Be consistent, you can claim that the long term benefits outweigh the short term costs, but don’t say you had nothing to do with the short term costs.

        • baw1064

          @ Arms Merchant,

          A few quotes from the Washington Times article you linked:

          The administration says 79 percent of the increases in recent years are from departments related to the war on terrorism: Justice, Defense, Homeland Security, State and Veterans Affairs.

          Even as the total number of federal employees rises, the ratio of employees to Americans has declined steadily, from one employee for every 78 residents in 1953 to one employee for every 110 residents in 1988 to one employee for every 155 residents in 2008.

          Including both the civilian and defense sectors, the federal government will employ 2.15 million people in 2010 and 2.11 million in 2011, excluding Postal Service workers.

          OK, so federal employment is projected to decline this year, is about half of what it was, relative to population, 60 years ago, and most of the increases in recent years are in areas that John Guardiano keeps insisting are absolutely vital. Oh, and something like 30% of the federal workforce is going to retire in the next ten years.

  • forgetn

    Simple math: Federal gov’t 7% of American GDP, State gov’t 13% of GDP. The states are not using “anti-Keynesian stimulus” whatever that may be, they’ve run out of money and excuses. State government grew on the back of the property bubble (all those lovely state tax revenues) and now are shrinking.

    In a nut shell, in 2010 private companies created 800,000 jobs, all levels of government cut 200,000 jobs, and the labor force grew by around 1.5/2 million. That’s simple math.

  • aed

    sdspringy, just fyi the shrinking of state government has resulted in my daughter being warehoused in study halls because her school had to lay off teachers, so I’d recommend you not fall into the “when you’re a hammer everything is a nail” trap and assume that across the board state government reductions in spending are to be lauded. Lessado says it well: government is always too big except when you need it.

    As to the slow job growth, the NYT’s has an interesting piece today about the unemployment rate being at 14.2% for non-college grads and 4.2% for college grads, with actual shortages in the available labor force for IT, engineering and health care.

    • Arms Merchant

      There’s little if any correlation between education spending and achievement.
      http://simplecomplexity.net/wp-content/uploads/2009/09/cato.jpg

      One would think that a in a rational system of state support to education, teachers would be the last to go. Maybe you should ask your state legislator why they aren’t laying off administrators and bureaucrats instead. Or cutting elsewhere besides education. But you already know the answer to that.

      And why is your local school so dependent on the state? If you really think you need the resources, why not campaign for higher local taxes? Lots of people support public education.

  • Non-Contributor

    “turns out to be an era of streamlining and cutback in a bloated local government sector.”

    People make this statement but where is it “bloated”. All I get are anecdotal comments. Too many teachers, postal workers, firemen, police, transportation, state offices… where is the “bloat”?

    Here is the data; explain “bloated”.

    http://www.opm.gov/feddata/HistoricalTables/TotalGovernmentSince1962.asp

    • armstp

      Non-contributor,

      Actually factoring out the military, total government employees has shrunk significantly over the last decade or two, particularly when you compare to GDP growth.

      In addition, government spending, if you take-out the emergency economic spending is down. Government spending as a percentate of GDP has remained steady at between 20-22% over the last 50 years. Tax revenues as a percentage of GDP is also down to the lowest level since the 1950s. There is absolutely no evidence of government in this country being “bloated”.

      • Arms Merchant

        @armstp

        Put simply, from 1999 to 2010, the US population grew by 10% and inflation reduced the value of the dollar by about 30%. Combine those two, and Federal spending should have gone up roughly 43% over that period. Instead, it went up 135%, or three times what it should have.
        http://andstillipersist.com/2011/02/the-clinton-budget-fallacy/

        And even if you assume the federal government should have grown by 43%, shouldn’t the feds been been able to spend less due to productivity increases that private industry experienced from the IT and communications revolutions?

        • armstp

          Arms,

          So you are using numbers up to 2010, which is a little unfair. If you factor our the impact of the recession and the increased spending related to emergency measures spending has not increased over the last two years.

          Recent Trends in Government Spending:

          “So how does one debunk the exploding government spending story? It’s not quite as easy as the employment issue — but it remains true that the idea that we’ve seen a surge in the size of government is basically wrong. Let me walk through the issues.

          First of all, look at the fact that the ratio of government spending to GDP always rises during recession. That’s largely not because spending is up, it’s because GDP is down.

          We can correct for this by using estimates of potential GDP, the level of GDP that the CBO estimates would be produced if we were at full employment. FRED has that series in real terms; we can get a nominal estimate by multiplying it by the GDP deflator, which lets us produce government spending as a percentage of potential GDP, a much better indicator of government size: (see chart from link).

          There’s still a rise in spending, but now we’re talking about around 2 points of GDP rather than 5.

          So what’s behind that more limited rise? Mainly, it’s about people losing their jobs and their incomes, and therefore turning to aid programs. Unemployment benefits account for almost half the rise in spending: (see chart from link)

          Food stamp outlays have also surged.

          And while I’ve had trouble tracking down a dollar number, Medicaid rolls rose 13.6 percent from Dec. 2007 to Dec. 2009.

          What’s left after you take account of these emergency aid programs? Not much, if anything.

          So that’s the story: despite what you’ve heard, there hasn’t been any surge in the size and role of government.”

          http://krugman.blogs.nytimes.com/2010/12/24/recent-trends-in-government-spending/

          .
          .

          Even More On The Origins of the Deficit:

          “During the pre-crisis period, spending grew slightly faster than GDP — that’s Medicare plus the Bush wars — while revenue grew more slowly, presumably reflecting tax cuts.

          What happened after the crisis? Spending continued to grow at roughly the same rate — a bulge in safety net programs, offset by budget-slashing at the state and local level. GDP stalled — which is why the ratio of spending to GDP rose. And revenue plunged, leading to big deficits.

          But I’m sure that the usual suspects will find ways to keep believing that it’s all about runaway spending.”

          http://krugman.blogs.nytimes.com/2010/10/18/even-more-on-the-origins-of-the-deficit/

        • Arms Merchant

          So your argument boils down to, “Government really hasn’t grown in the last two years; therefore it’s not too big.”

  • rbottoms

    Because the Fortune 500 are sitting on billions and billions while continuing to slash payrolls and squeeze every last erg of effort from the overworked employees who remain.

    BTW, you’ve just announced Obama’s second term

    Unemployment under 10% next January, Obama gets re-elected.

    Under %8, it will be a landslide.

    Meanwhile Republicans are busy chasing abortion doctors, birth certificates, requiring citizens buy guns, and telling women that if their father rapes them don’t expect any help from the GOP.

    In short, they are ding everything to paint themselves as certifiable and nothing at all about jobs.

    I like it!

  • armstp

    Actually the U.S. economy added about 1. 3 million private sector jobs in 2010. That is not bad job growth, althoug we could use more.

    Also taking the unemployment rate down to 9.0% from 9.8% in one year is no small feat.

    Just in case you did not know the unemployment rate is calculate from a completely different set of numbers than what the job growth numbers are, so it is hard to read the same thing into each indicator. They can be saying completely different things.

  • buddyglass

    Unemployment varies widely by educational level and locality. Some stats:

    By education level:

    No HS Degree: 15.3%
    HS Degree, no college: 9.8%
    Some college or associate degree: 8.1%
    Bachelor’s or higher: 4.8%

    BLS doesn’t have stats on those with advanced degrees but one unofficial article I found said the rate was around 3%.

    By occupation type:

    All: 9.1%
    Professional and related occupations: 3.8%

    Some metro areas w/ low rates:

    Austin, TX: 7.1%
    Salt Lake City, UT: 7.1%
    Oklahoma City, OK: 6.2%
    Boulder, CO: 6.8%
    Des Moines, IA: 6.2%
    Lafayette, LA: 6.2%
    Minneapolis, MN: 6.5%
    Omaha, NE: 4.6%
    Manchester, NH: 5.3%
    Burlington, VT: 4.8%
    Charlottesville, VA: 5.4%
    Madison, WI: 5.0%

    So if you have a degree, work a professional job and are willing to relocate, the situation isn’t that bad.

  • WillyP

    Gallup reports unemployment at 9.8%.

    Canadian economy, 1/10 the size, adds twice as many jobs as U.S.

    Fed pumping to cease in June. (Note: may resume after economy stalls once again.)

    Debt limit will almost certain be raised to accommodate additional paper and compensate for $1.5 tril deficit.

    Several large states facing legitimate bankruptcy fears including Illinois, California, and New York. This means more layoffs to come – lots more.

    Housing market still in disarray.

    Spain, Portugal, Italy all in danger of default. Euro is on life support.

    Unrest in the Middle East could send oil to $120, $140/barrel.

    Yup, the Obama recovery has finally arrived!

    • pnwguy

      WillyP:

      Canada was smart enough to keep tight regulations on their banks. Almost none of their financial institutions got into trouble, because of stringent federal oversight and liquidity requirements. In fact, some of the larger banks suddenly became the largest in North America in terms of assets as US banks declined in comparison. Canada also didn’t give tax subsidies to home ownership, yet maintain essentially equal percentages of home ownership compared with the US. I don’t think they had anywhere close to the problems with over-inflated real estate collapsing that we did.

      In other recoveries, people in high unemployment areas can relocate to areas with unfilled jobs. But the high percentage of people underwater in their mortgages is unique this go around, so its going to stretch out the unemployment aspects longer than usual. Unless you are willing to walk away from their homes, you often can’t move to places that are hiring.

      Most of the problems Canada faced economically in the past 2+ years is that WE are their largest export purchaser, and we’ve been in decline.

  • rbottoms

    Yup, the Obama recovery has finally arrived!

    And where is the blockhead failed warmonger who caused all this mess? Oh yeah, he’s off clearing brush on his farm dreaming about having a tall cold one.

    Obama saved the world’s entire banking system after the greedy hedonism of Wall Street brought everyone, and I mean everyone to the brink of calamity.

    We were staring into the abyss two years ago and now the Dow is back, bankers are back to shoveling $20′s into their fireplaces again and the barest glimmer of light that recovery is here has begun to shine. You teabaggers can keep your funny hats and Stalin posters, the rest of us on planet Earth have work to do.

  • WillyP

    “the rest of us on planet Earth have work to do.”

    lol. I hope you do that work in your state-issued Mao suit.

    and now we’re supposed to blame “winter weather” for the bad employment numbers. Democrats really hate that weather of late. Doesn’t get warmer when it should. Doesn’t allow job growth.

    They’ve abolished the high cost of healthcare. Why can’t they abolish inclement weather?

    • pnumi2

      Willy
      Are you going to gloat and do the Eagle’s Nest jig whenever bad economic numbers are released and pray for more bad economic numbers to come until January 2013, when another dumbass clone of the dumbass who got us into this mess, takes office?

      The Republidorks had control of the House from January 1995 until January 2007 and therefore had complete control over any Bill or law that passed Congress. This was the period of time that the housing bubble started and took hold. But the House was busy impeaching Clinton and looking at Whitewater with a fine tooth comb and couldn’t be bothered looking for any bubbles, housing or otherwise.

      You are fool if you think that the problem we are going through now got started when the Democrats took back the Senate 51 – 49 in January 2007 as many of your cohorts here do. The Democrats couldn’t get things through last year when it was 59 – 41.

      The problem with republicans and conservatives is their inability to admit when they are wrong. They can’t stand being blamed for anything, especially when they deserve the blame.

  • Rabiner

    “One would think that a in a rational system of state support to education, teachers would be the last to go. Maybe you should ask your state legislator why they aren’t laying off administrators and bureaucrats instead. Or cutting elsewhere besides education. But you already know the answer to that. ”

    Except States already spend the vast majority of their budgets on education. For example in California education spending (all levels) is around 50% of the budget if not a little more. Take prisons into account and you’re at 65% of the budget before you get to any other core functions and the prisons are so expensive due to court rulings mandating specific services in prisons (i.e. health care).

  • sinz54

    I’m not convinced that the entire story is that public-sector jobs have declined.

    Even once-booming areas of the high-tech private sector, like Silicon Valley in CA, are feeling the pinch.

    On this one, I happen to agree with Paul Krugman: The real problem is that aggregate demand continues to lag. And it continues to lag because Americans can no longer play the game of tapping the equity in their homes to buy stuff. Deleveraging is a good thing in the long run. But in the short run, it means that we won’t see boom times in the consumer sector–which is two-thirds of the U.S. economy.

  • buddyglass

    > Gallup reports unemployment at 9.8%.

    BLS says 9.0%. Unemployment may remain high for several years, but the trend is downward:

    Jan: 9.0%
    Dec: 9.4%
    Nov: 9.8%

    The previous unemployment peak was 6.3% in June 2003. The rate then gradually fell to 4.4% in October 2006. That’s a drop of 1.9% in 40 months.

    The most recent peak was 10.1% in October 2009. The current rate of 9.0% represents a 1.1% decrease in 15 months. That’s a faster rate of decrease than we saw last time.

    > Canadian economy, 1/10 the size, adds twice as many jobs as U.S.

    Good point. Maybe we should have been emulating Canada all along?

    > Debt limit will almost certain be raised to accommodate additional paper and compensate for $1.5 tril deficit.

    Deficit = bad. Should be shrunk. At the same time, given we’re not going to eliminate the deficit in a single year, do you propose we not raise the debt limit and instead default?

    > Several large states facing legitimate bankruptcy fears including Illinois, California, and New York. This means more layoffs to come – lots more.

    Fewer people on the govt. payroll. I’m surprised you don’t view that as a good thing. It’s also not Obama’s fault that various states were caught unprepared by the severity of this recession.

    > Housing market still in disarray.

    Housing hasn’t recovered yet, but, like unemployment, the trend is positive.

    > Spain, Portugal, Italy all in danger of default. Euro is on life support. Unrest in the Middle East could send oil to $120, $140/barrel.

    Both of which are entirely outside Obama’s control.

  • Madeline

    rbottoms : And where is the blockhead failed warmonger who caused all this mess? Oh yeah, he’s off clearing brush on his farm dreaming about having a tall cold one.

    No, he’s not. He sold that farm when he no longer needed it for his “real American” photo ops.

  • PracticalGirl

    Why IS the jobs growth so slow, especially since Brad Schaeffer (FF contributor) and all his business friends got the tax “certainty” they said would catapult them all to mad hiring sprees?

  • mickster99

    Who needs governments anyway?

    Really, smaller is better especially if you want to drown it in a bathtub.
    Thanks Mr. Norquist for your wisdom and astuteness.

    You know I think people in New York should stop whining about their city government and the lack of snow removal and just band together and buy their own damned snowplows. Then maybe take on an entrepreneurial spirit and rent their snowplow to other neighborhoods.

    The same plan can work for cops, the fire department, garbage, etc.

    There isn’t a single government service that can’t be replaced by neighborhoods working together.

    So you say you live in a small town that can’t afford it?
    Tough.

    Where’s that old-fashioned frontier how-the-west-was-won american exceptionalism. Whiners. Wusses.

    If yo want neighborhood fire protection yo can pay to have it.
    But who needs it?

    Come on.
    Government.
    Who needs it?
    Nobody.
    Who wants it?
    Nobody.

    • John Q

      There isn’t a single government service that can’t be replaced by neighborhoods working together.

      Yep – let’s get out there and build our own roads , and install our own traffic lights and sewer systems and sewage treatment plants and……..

      And it would all work so much better, wouldn’t it?

  • Non-Contributor

    This is an outright lie:

    “As we’ve seen, the actual numbers show what everybody knows: government at all levels has grown, and in particular at the federal level, since the crisis began, and also since Barack Obama took office. So it’s really not a myth when people complain about the “big government” of Barack Obama.”

    And this is a Glenn Beck comment (made for people that can’t think for themselves):

    “and inflation reduced the value of the dollar by about 30%”

    • mickster99

      Non-Con:

      your comment should read simply:

      And this is a Glenn Beck comment (made for people that can’t think):

  • budgiegirl

    <3 David Frum! Why can't all right wing nuts just be honest for a minute and say that Obama saved us from disaster. I think the Obama administration handled the economy so well that people have simply forgotten or taken for granted what dire straits we were in.
    Same is true for a variety of issues – both domestically and internationally … let's see -crashing economy, H1N1 paninfluenza, gulf oil spill, all sorts of things could have been handled much worse and we would have been hearing about it forever – but contrary to what many on the right want to admit – the administration has been pretty deft about a whole host of issues.

  • Primrose

    “and now we’re supposed to blame “winter weather” for the bad employment numbers. Democrats really hate that weather of late. Doesn’t get warmer when it should. Doesn’t allow job growth.”

    Well, Willie P. It doesn’t allow growth. In case you don’t live in the Northeast, we’ve had a very snowy winter, not interestingly a cold one, but very, very snowy. That means people are not getting out to the stores and buying. If I were a small business up here, I would definitely struggle though a few more months before hiring anyone.

  • Arms Merchant

    Interesting article over at Fabius Maximus.
    http://fabiusmaximus.wordpress.com/2011/02/03/24496/

    In one of the links, Richard Koo compares the current recession in U.S. with Japan’s big recession 15 years ago.

    His theory is simple, but powerful: in a “balance sheet recession,” companies no longer maximize profit, but rather pay down debt. In other words, there is little demand for loans or hiring to expand. Rather, they are frightened of stakeholders finding out just how bad a shape their companies are in, and are paying down debt as fast as possible to get their balance sheets back in shape.
    http://bit.ly/hetD4L

    Also, households behave the same, which why most of the rebates to individuals go to pay down debt or into savings, instead of being spent.

    Koo argues for continued fiscal stimulus (Note to Ben Bernanke, this does NOT mean what you are currently doing, i.e., monetary stimulus).

    Of course, there is stimulus and then there is the 2009 Porkulus that Obama outsourced to Pelosi and friends, mostly payoffs to their favored constituencies.

  • TerryF98

    “Of course, there is stimulus and then there is the 2009 Porkulus that Obama outsourced to Pelosi and friends, mostly payoffs to their favored constituencies

    Sigh!

  • valkayec

    Arms Merchant – go back and read Milton Friedman again.

    Second – and just be factitious – let’s just eliminate the excess federal support to state, i.e. they get back no more in federal aid, credits, and tax expenditures than they put in.

    FYI, actual federal employee number is down considerably while the number of private contractors increased greatly (hugely?). Remember Bush’s push to privatize government? Now, the Obama Admin is reducing all those expensive private contractors, thereby saving many millions in taxpayer dollars. What so many who play this “bloated government” game miss is that it’s not the numbers of employees (0r the free market ideology) that counts, it’s the costs! What is the most cost effective?

    One more thing for the Mises fans, until we have a truly “free market” devoid of tax expenditures, credits, subsidies, lobbying payments and tit for tat political donations, industries writing regulations, rent seeking, monopolies or near monopolies, and all kinds of other industry specific protections, we do not have a Free Market. Our free market is not more free than Queen Elizabeth’s Hudson Bay Company or Queen Victoria’s East India Company. So, let’s get over the free market rhetoric until we actually have one.

    • Arms Merchant

      Hey, I’m as big a fan of Friedman as anyone, but what Koo says makes a lot of sense:

      If everyone is deleveraging, what happens to money supply? Money supply is basically made up of bank deposits. When people use money to pay down debt, they withdraw money from their bank accounts and pay it back to the banks. So deposits, money supply, shrink. During the Great Depression, as Milton Friedman and Anna Schwartz observed, U.S. money supply shrank by 33%. They attributed this contraction to bank runs and bank failures that wiped out the savings of many Americans. The implication was that if only the Fed had injected more reserves, the banking crisis – and the entire Great Depression – could have been avoided. But a closer look at the data, from the perspective of my balance sheet recession theory, produces a very different explanation of why money supply collapsed – it was almost entirely due to people paying down debt.

      Monetary policy in a balance sheet recession doesn’t do much good – as we found out in Japan, and as zero interest rates in the United States are demonstrating right now. But Mr. Bernanke, who long has been a student of the late Milton Friedman, has been arguing that monetary policy can solve almost all problems for the last 30 years. So for him, the idea that zero interest rates cannot cure America’s ills is unacceptable. That’s why he has gone to so-called unconventional monetary policy, buying distressed assets from the private sector and so forth, expanding the Fed’s balance sheet very aggressively
      http://welling.weedenco.com/default.aspx?menugroup=reprint&AspxAutoDetectCookieSupport=1

      You also said:

      Now, the Obama Admin is reducing all those expensive private contractors, thereby saving many millions in taxpayer dollars. What so many who play this “bloated government” game miss is that it’s not the numbers of employees (0r the free market ideology) that counts, it’s the costs! What is the most cost effective?

      Devil is in the details. Lots of businesses outsource special tasks (payroll, travel, etc.) because it makes more sense to pay a commercial business to do it. Depends on the specific case, but in general, government workers tend to cost more because they come with a lot of overhead. Used to be civil service made crappy pay but had great job security and benefits. Now they have both better pay AND better security and benefits.
      http://www.usatoday.com/news/nation/2010-03-04-federal-pay_N.htm

  • jorae

    Feb 2, 2011
    ” Any employment declines, however, generally will be carried out through attrition—simply not replacing workers who retire or leave the Federal Government for other reasons…”
    http://edu.govcentral.com/articles/33-salary_job_outlook_for_feds-

    And the baby boomer are coming of age…

    Thank God, Bush didn’t privatize Social Security…Money and Republicans, just don’t go well together….They are much better at bitching at other people about it.

  • SpartacusIsNotDead

    Arms Merchant:

    Great link to Richard Koo. By the way, that was at least the 2nd great link you’ve posted in the past week or so.

    Your points about Obama porkulus and the cost of private military contractors, however, don’t hold up – at least not with respect to military contractors.

    The 2009 stimulus was comprised largely of three parts: (1) aid to state and local governments, (2) tax cuts, and (3) infrastructure. Aid to state/local governments isn’t the most efficient stimulant, but it certainly doesn’t qualify as pork, which typically means money spent buying something that produces no public good. That aid helped states keep police, firefighters, teachers and many other govt workers employed. The unemployment rate would have been significantly higher without it.

    As for the cost of private military contractors versus government military workers, the argument for private contractors is definitely a loser – at least as of 2001.

    http://www.govexec.com/dailyfed/0701/072601p1.htm