OUR CORNER: Cuts in government spending do not create jobs
By BRIAN BECKLEY
Bonney Lake-Sumner Courier-Herald Reporter
August 9, 2011 · 3:15 PM
Twice a day, my commute takes me through the Eastown part of Bonney Lake, where they are about to wrap up a road construction project that has been under way for more than a year.
The other morning as I was driving in, one of the talking heads on my radio dial was spewing on about how we need to create jobs in this country and that government spending is not the answer.
More cuts were needed, that was the only answer, the only way to get things back on track.
As he was talking, I looked out my window and saw all of the orange vests running around the construction site and it suddenly snapped into focus for me that cutting government spending further would mean that these people would probably not have jobs.
It would certainly help balance out the state budget by eliminating these positions, but the repercussions of such a move would be much further reaching.
At a bare minimum, it would mean a higher unemployment rate as these would be people immediately going from being contributing members of the economy to being people who need state aid.
Because cuts in government spending directly correlate to the unemployment rate. Those people in the orange vests are paid by state spending. Those are actual jobs created by government.
One of the primary difficulties in coming out of this recession has been the employment market. Anybody paying attention knows that the job scene continues to be bad. It's not as bad it could be – or so they say – but that does little to take the edge off how bad it actually is.
One of the contributors is, of course, the slow private sector job market where, despite record-sized corporate profits at many major corporations, those profits fail to trickle down into new jobs in the way one might hope.
There are new private sector jobs, but a New York Times blog post last week broke apart the latest jobs report to show that while private sector jobs are up 1.7 percent during the past 12 months, the percentage of adults with jobs continues to fall.
That's because the public sector continues to shrink at a considerable rate. According to the New York Times, the public sector loses jobs every day, especially at the state and local level, and is down a full percentage point in the past year.
That's a tough hole to dig out of. We are firing government workers at a faster pace than we can create public sector jobs, which actually creates a higher need for the government services we are cutting from.
It's a vicious cycle.
In our area, those "state jobs" come primarily in the form of teachers and other school district employees, many of whom live right here in these communities.
But it also means those workers will not be spending their money at our local coffee shops and stores, meaning less sales tax into local coffers and less money into the pockets of local business owners meaning a downward spiral of people not spending and business closing and then those people not being able to spend.
All of the school districts have been forced to slash their budgets in recent years, resulting in dozens of positions lost in each school district (as well as larger class sizes, less support for the teachers remaining and the potential loss of valuable community resources like the Sumner pool).
For example, according to a handout from the Sumner School District, the loss in state funding has forced them to slash their ranks. The district has tried to keep the cuts as far away from the classroom as possible, but that's not always possible and every cut impacts the classroom.
In recent years, the district has cut 23 percent of its administrative staff. That's a big number.
From 2009-2011, among the positions cut but the Sumner School District – positions that are no longer contributing to any of the restaurants or shops in our towns – are 12.5 professional development specialists, a principal, two central office administrators, 2.3 custodial positions and 19 secondary teaching positions (most teaching cuts were made through attrition, meaning that as people retired, their positions were not filled; these are not people specifically fired because of the cuts, but are definitely people NOT hired because of them).
These are the results of a cuts-only approach to budgeting. And it's the same at almost every district in every town. And all because of our refusal to even considering raising any new revenue.
In another example, east Pierce County is about to lose its bus service. Beginning in October, there will be no Pierce Transit buses going further east than Puyallup (though they will still collect sales tax revenues from the area). Voters were given a choice of bad or worse options – raise taxes slightly (three cents on a $10 purchase) and lose some service or keep the current tax rate and lose all service.
Voters, predictably, shot down the minor increase and have now lost everything, especially for those who need it most and rely on buses to get to work.
It sounds terrible to think that taxes might have to be raised a little – even on people who are among the top percentage of earners – but yes, in difficult times sometimes that's the only choice.
That's not to say we don't have a spending problem in this country. We do. Generally speaking, I agree that spending has to be reigned in. But revenue must be allowed to increase.
But we also have a revenue problem: we don't take enough of it in. In fact, much of the current deficit nationally is due to the Bush tax cuts, which if they were allowed to expire as planned, would have juiced the budget with the revenue it needs.
But tax cuts totally lose their effectiveness as a stimulus when they are left on too long. Any kind of cut like that designed to spur on the economy, be it in impact fees or tax cuts or bargain basement prices on six packs of Coke can only stay that way for a limited time before it begins to reach a diminishing return and you end up with a huge deficit.
Which is exactly what happened across the country at both the state levels and the federal budget.
And that's why S&P downgraded our bond rating. Yes, spending is high, but the refusal of Congress to even consider any revenue increase shows we are not truly serious about trying to reign in the deficit.
Because the way we're doing it now is obviously no way to run a country.Contact Bonney Lake-Sumner Courier-Herald Reporter Brian Beckley at firstname.lastname@example.org or 360-825-2555 ext. 5058.