Thursday, February 23, 2012

Detroit News Endorses Austerity

Actually, this op-ed endorsed Mitt Romney to be our next President. There was one paragraph that actually made sense:

We disagree with Romney on a point vital to Michigan — his opposition to the bailout of the domestic automobile industry. Romney advocated for a more traditional bankruptcy process, while we believe the bridge loans provided by the federal government in the fall of 2008 were absolutely essential to the survival of General Motors Corp. and Chrysler Corp. The issue isn't a differentiator in the GOP primary, since the entire field opposed the rescue effort.

Of course, this paragraph was omitted in the version of the op-ed that the Romney camp distributed. Too bad as the rest of the op-ed was the kind of GOP spin we’ve come to expect including a claim that Bain Capital was all about job creation and a clever way of making a virtue of how the architect of RomneyCare contradicts himself as he condemns ObamaCare. But it is its praise for austerity as an alleged cure of our unemployment problem that is the most laughable aspect of this silly op-ed.

Romney knows how government policies affect private sector decision making. He understands the consequences of actions that raise business costs. And he gets that business is not the problem in America — a bloated and wasteful government is. He knows how to encourage the former and deflate the latter. Romney has been criticized by his opponents for downsizing troubled companies and firing workers. He acknowledges that those are often wrenching decisions. But if America is to avoid financial catastrophe, the next president must be willing to downsize government, jettison some of its operations and slash a federal work force that has grown by 12 percent over the past four years. Romney is best equipped for that task.

Our graph shows employment by the Federal, state, and local governments from January 2007 to January 2012 hoping to make a few points. One is simply that the Federal government is not the only government employer. Local and state government employment was over 87% of total government employment as of January 2012. Mark Thoma provides us with What’s Wrong With This Picture showing how local and state government employment has been declining over the past few years.

The other thing about our graph is I don’t see this alleged explosion in Federal employment. It is true that employment by all sectors of the government was rising in 2007 (before the recession) and continued to rise a bit in 2008 (before Obama became President). But over the past four years, Federal employment has risen by only 3.4%. If one looks at the last three years, Federal employment has increased only 1.4%. Over this same three year period, total government employment has declined by 2.7 percent.

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