The following editorial appeared in The New York Times on Monday:
The headlines from the second presidential debate focused on President Barack Obama challenging Mitt Romney on issue after issue. There was a less noticed, but no less remarkable, moment when Obama agreed on something with Romney – and both were entirely wrong.
The exchange began with a question about the offshoring of U.S. jobs. Part of Obama’s answer was that federal investments in education, science and research would help to ensure that companies invest and hire in the United States. Romney interrupted. “Government does not create jobs,” he said. “Government does not create jobs.”
It was a decidedly crabbed response to a seemingly uncontroversial observation, and yet Obama took the bait. He said his political opponents had long harped on “this notion that I think government creates jobs, that that somehow is the answer. That’s not what I believe.” He went on to praise free enterprise and to say that government’s role is to create the conditions for everyone to have a fair shot at success.
First, the basics. At last count, government at all levels – federal, state and local – employed 22 million Americans, with the largest segment working in public education. Is that too many? No. Since the late 1980s, the number of public sector workers has averaged about 7.3 for every 100 people. With the loss of 569,000 government jobs since June 2009, that ratio now stands at about 7 per 100.
Public sector job loss means trouble for everyone. Government jobs are crucial to education, public health and safety, environmental protection, defense, homeland security and myriad other functions that the private sector cannot fulfill. They are also critical for private sector job growth in two fundamental ways. First, the government gets its supplies from private sector companies, which is why Republican senators like John McCain have been frantically warning about the dire effects on job creation if Congress moves ahead with planned military spending cuts. (Republicans insisted upon the cuts as part of their ill-advised showdown over the debt ceiling.) Second, government spending on supplies and salaries reverberates strongly through the economy, increasing demand and with it, employment.
That means the economy suffers when government cuts back. A report by the Economic Policy Institute examined the effect of recent cutbacks at the state and local level – including direct loss of government jobs and indirect loss of suppliers’ jobs; the jobs that should have been added to keep up with population growth; and the reduction in purchasing power from other cutbacks. If not for state and local budget austerity, the report found, the economy would have 2.3 million more jobs today, half of which would be in the private sector.
The government does not create jobs? It most certainly does. And at this time of state budgetary hardship, a dose of federal fiscal aid to states and localities could create more jobs, in both the public and private sectors.
The New York Times