RALEIGH — As measured by Gross Domestic Product growth alone, the recovery began nearly 10 months ago - but tell that to the more than 470,000 North Carolinians still without work. Tell the policymakers struggling to balance a budget in the face of declining revenue and you are likely to get a chuckle.
Indeed, there are sound economic reasons to heed their skepticism. The two most significant drags on our economy continue to be slow job growth and the state fiscal crisis. If not addressed directly and immediately, both promise not only to prolong the suffering of hundreds of thousands of families and their communities but also to undo the small gains made to date.
Late last week the U.S. Senate failed to move a bill that would extend essential fiscal relief to states, as well as fund temporary unemployment insurance provisions passed under the American Recovery and Reinvestment Act.
As a result, the Employment Security Commission estimates that 20,000 North Carolinians will lose unemployment benefits that they would spend quickly and close to home, boosting the local economy and helping local businesses avoid layoffs.
In addition, North Carolina won't receive more than $340 million in federal assistance, forcing even deeper spending cuts than we've already endured in the face of an unprecedented drop in revenues brought on by the recession. These actions will cause private- and public-sector job losses and raise the risk of a double-dip recession as the loss of spending power ripples through the economy. Without more federal aid, state budget-cutting actions nationwide could cost the economy 900,000 jobs in the public and private sectors next year.
Failure to pass this jobs bill by the July Fourth recess will be disastrous. We already know the potential chilling effect that state fiscal crises can have on our economic growth. Estimates by the Center on Budget and Policy Priorities found that if it hadn't been for the contraction of state and local government spending, the economy would have grown at 3.5 percent in the first quarter instead of 3.0 percent - a $71.5 billion difference.
Rather than considering the precarious position of our economy today, the debate surrounding this bill has centered on the need to address the long-term deficit by reducing the cost of the bill. Concessions have been made and the bill significantly pares back these much-needed investments. We can only hope that the efficacy of these measures will not be further compromised for a less-than-1 percent impact on the long-term budget gap.
U.S. Sen. Kay Hagan should be praised for understanding the importance of shoring up our recovery today and taking a practical approach to managing the long-term budget deficit that doesn't undermine our progress. It's too bad more of our leaders aren't able to see that without consumers spending and workers providing essential public services, there is little hope that our economic future will brighten.
Alexandra Forter Sirota is a policy analyst for the N.C. Budget & Tax Center, a nonprofit group.