As we have shown HERE - cuts in government spending have cost 1.7 million jobs. There has been a significant departure from prior year government spending under the Obama administration; since the federal government won’t help states cover their temporary shortfalls unlike in years past. In fact – president Reagan saw an increase in government spending that was significantly more than under the Obama administration (source). And if the Republican party wouldn’t be holding up assistance to state budgets – then the unemployment rate would be around 7%. That’s the difference.
Talking Points memo explains:
Obama’s been hobbled by public-sector layoffs during this crisis in a way his predecessor George W. Bush never was back in 2001. Where the federal government stepped up to prevent states and municipalities from laying off teachers and other government workers in previous recessions, it’s fallen on its face under Obama.
More broadly, government spending at all levels rose steadily under Presidents Reagan and both Bushes, but was mostly flat under Clinton and has gone negative under Obama.
How does this phenomenon contribute to current economic woes? It’s impossible to know for sure. But if like the Wall Street Journal you imagine that the massive government job losses in Obama’s first term had never happened, then, all else equal, the unemployment rate right now would be down near 7 percent, a full percentage point below where it actually is.
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