|
| Chart shows number of federal, state and local government employees since |
WASHINGTON
(AP) -- Republicans and other fiscal conservatives keep insisting on
more federal austerity and a smaller government. Without much fanfare or
acknowledgement, they've already gotten much of both.
Spending
by federal, state and local governments on payrolls, equipment,
buildings, teachers, emergency workers, defense programs and other core
governmental functions has been shrinking steadily since the deep
2007-2009 recession and as the anemic recovery continues.
This
recent shrinkage has largely been obscured by an increase in spending
on benefit payments to individuals under "entitlement" programs,
including Social Security, Medicare, Medicaid and veterans benefits.
Retiring baby boomers are driving much of this increase.
Another
round of huge cuts - known in Washington parlance as the "sequester" -
will hit beginning March 1, potentially meaning layoffs for hundreds of
thousands of federal workers unless Congress and President Barack Obama
can strike a deficit-reduction deal to avert them.
With
the deadline only a week off, Obama and Republicans who control the
House are far apart over how to resolve the deadlock. While last-minute
budget deals are frequent in Washington, neither side is optimistic of
reaching one this time.
Even as the private
sector has been slowly adding jobs, governments have been shedding them,
holding down overall employment gains and keeping the jobless rate
close to 8 percent, compared with normal nonrecessionary levels of 5 to 6
percent that have prevailed since the 1950s.
"It's
a massive drag on the economy. We lost three-quarter million
public-sector jobs in the recovery," said economist Heidi Shierholz of
the labor-friendly Economic Policy Institute. "We're still losing
government jobs, although the pace has slowed. But we haven't turned
around yet."
A larger-than-usual decline in
federal spending, notably on defense programs, helped push the economy
into negative territory in the final three months of 2012. Economic
growth, meanwhile, has been inching along at a weak 1-2 percent - not
enough to significantly further drive down the national unemployment
rate, which now stands at 7.9 percent.
Although
federal spending is projected to decline from 22.8 percent of the gross
domestic product recorded last year to 21.5 percent by 2017, it still
will exceed the 40-year-average of 21.0 percent, according to the
nonpartisan Congressional Budget Office. Spending peaked at 25.2 percent
of GDP in 2009.
The budget office also said the economy is roughly 5.5 percent smaller than it would have been had there been no recession.
The
Defense Department already has made deep spending cuts, and outgoing
Defense Secretary Leon Panetta said 800,000 civilian Pentagon employees
were notified this week they likely are to be placed on periods of
unpaid leave due to lawmakers' failure to act.
The
recent downsizing in government is most pronounced at the state and
local levels. Most states have constitutional or statutory requirements
for balanced budgets.
That means nearly all states are prohibited from running budget deficits, while the federal government is not.
Not
only can the federal government run deficits, but it can print money -
through actions by the Federal Reserve - something states are prohibited
from doing.
Those calling for a smaller
government mostly don't take notice of the wave of recent cutbacks.
Their clarion call remains Ronald Reagan's mantra: Government doesn't
solve problems, it is the problem.
"This
spending issue is the biggest issue that threatens our future," House
Speaker John Boehner, R-Ohio, says. "When are we going to get serious
about our long-term spending problem?"
And
Florida Sen. Marco Rubio of Florida, delivering the GOP response to
Obama's State of the Union address, said "a major cause of our recent
downturn was a housing crisis created by reckless government policies."
Soaring
recent government deficits are partially a side effect of the worst
recession since the 1930s, which
took a huge bite out of tax revenues at
the same time spending increased on recession-fighting programs like
unemployment compensation and stimulus measures under both Presidents
George W. Bush and Obama.
"The problem going
forward is one of demographics and rising health care. It is the
baby-boom generation retiring," said Alice Rivlin, a White House budget
director under President Bill Clinton. "It's the fact that everybody is
living longer."
Republicans argue that
entitlement programs should be on the cutting board as well as other
government
programs. Democrats generally have been more protective of
them, although the president and many congressional Democrats
acknowledge some paring of these popular programs is in order.
The
federal budget deficit for the fiscal year ending Sept. 30 is estimated
to be $845 billion - the first time it's dropped below $1 trillion in
five years. But it's on track to rise again as more and more baby
boomers retire and qualify for federal benefits and as interest payments
on the national debt keep going up.
The
national debt first inched past $1 trillion early in the Reagan
administration and has grown in leaps and bounds ever since through both
Democratic and Republican presidencies. It now stands at $16.6 trillion
and is on a path toward soon becoming unsustainable, both parties
agree.
Unchecked, entitlement payments will add roughly $700 billion to the debt over the next four years.
For
now, though, "the economy is continuing to heal from the worst economic
downturn since the Great Depression," top White House economic adviser
Alan Krueger says.
Under the sequester law,
roughly $85 billion in federal spending would be slashed in the
remaining seven months of this fiscal year and a total of $1.2 trillion
in cuts over 10 years.
While entitlement
programs and uniformed military personnel would be exempt, the rest of
the government would be hit with indiscriminate across-the-board cuts.
Obama
wants government deficits trimmed through a mix of selective spending
cuts and new tax revenues, mostly by ending deductions and tax credits
frequently claimed by the wealthiest Americans.
Republicans oppose any new taxes, even if for closing loopholes rather than increasing rates.
The
president has been making campaign-like trips to highlight the damage
the pending sequester cuts would be to various sectors of the economy.
On Tuesday he'll go to a shipbuilding company in Newport News, Va., the
White House announced.
"In just seven days, a
series of automatic cuts could go into effect that would severely affect
companies, like this one, that depend on the defense industry and its
workers," White House spokesman Jan Carney said Friday.
The
looming spending cuts were first scheduled to take effect on Jan. 1.
But they were postponed to March 1 as part of year-end "fiscal cliff"
negotiations that also raised tax rates on affluent Americans.
Republicans insist that's enough tax increasing for now.
