The Republican onslaught continues. Public sector employees are just the current manifestation of an effort by Republicans to get back into power — to retake the House of Representatives, the Senate, and ultimately the White House. Central to the Republican strategy from the first day of the Obama presidency has been a concerted effort to slow and delay the recovery of the American economy.
It started with opposition to the Recovery Act, and Republicans succeeded to the extent that many of the compromises limited the stimulus effect contained in the final legislation. Way too much of the Recovery Act stimulus was in the form of tax cuts, and too little went to create jobs. President Obama won the battle to save the American automobile industry, but that didn’t stop Republicans from trying to turn saving General Motors and Chrysler into something sinister. Millions of American jobs were saved and the American automobile industry is profitable again.
Fortunately, the Federal Reserve is independent and strong enough to shrug off the political attacks that Republican zealots in Congress have been making to try and undermine that independence. Republicans have criticized every effort made by the Fed to revive the financial system. Fed interest rate policies and activities in buying back U.S. Treasury debt are helping to fuel economic recovery, and the truth is that the actions of the Federal Reserve have since 2008 literally saved the American economy.
Now State Governors are getting into the act and pretending that somehow teachers and other public sector employees are making unreasonable demands in asking State governments to make good on commitments rather than give those same dollars to the wealthy in the form of tax cuts.
The recent legislation passed in the House of Representatives to fund the federal government for the remainder of fiscal year 2011 cuts $61 billion, and the Republicans are pressing for $4 trillion in cuts and benefit reductions over the next decade. Some surprising people have been weighing in to point out how damaging these cuts will be to job creation.
Mark Zandi, economic adviser to John McCain during the 2008 presidential campaign, last week estimated that the $61 billion in cuts proposed by House Republicans for fiscal year 2011 would slow economic growth and could lead to the loss of 700,000 jobs.
Federal Reserve Chairman Ben Bernanke agreed that there would be slower growth but estimated the job losses at only 200,000 jobs. However, Bernanke went on to say:
“We need to address the deficit. That’s very important … but I think it would be most effective if we did that over a time frame of five or 10 years and not try to do everything immediately.”
President Obama’s proposed fiscal year 2012 budget outlines 10 year budget savings of $1.1 trillion, according to the Congressional Budget Office, and would achieve $33 billion in savings in fiscal year 2012. Among the reductions, painful cuts in low-income heating assistance, and cuts in grants to states for things like airports and water treatment plants. The president’s proposal would also freeze non-security discretionary domestic spending for five years, and includes a two-year pay freeze for federal non-military employees.
President Clinton curbed federal spending early in his first term and raised marginal tax rates on the wealthiest individuals. The result was the creation of 22 million jobs during his 8 years in office, and he left a projected $5.6 billion surplus to President Bush. It’s time to tighten our belts alright, but not at the expense of already stressed middle class American families. Those who can afford to kick in a few more tax dollars need to be asked to do so long before we lay off public sector employees, and further reduce government programs that help the poor and grow the American middle class.
