How to Grow the Economy in One Easy Step

In his latest column for The New York Times, Paul Krugman provides an estimate of what the economy lost due to cutbacks on the state and local level:

The federal government has been pursuing what amount to contractionary policies as the last vestiges of the Obama stimulus fade out, but the big cuts have come at the state and local level. These state and local cuts have led to a sharp fall in both government employment and government spending on goods and services, exerting a powerful drag on the economy as a whole. […]

We’re talking big numbers here. If government employment under Mr. Obama had grown at Reagan-era rates, 1.3 million more Americans would be working as schoolteachers, firefighters, police officers, etc., than are currently employed in such jobs. [Emphasis mine]

Two quick points. First, this is a definitive rebuttal to the Republican claim that government has grown dramatically during the Obama years. The fact is that the public sector has shed hundreds of thousands of jobs since 2009, and—when you exclude temporary stimulus spending—the federal government has only grown at a modest pace.

Second, as Krugman notes at the conclusion of his piece, the United States doesn’t need bold plans to get its economy off the ground; sustained stimulus to states and localities would do the trick, and provide countless communities with the personnel they need to fight fires, protect the streets, and teach children. It’s a win-win measure that, unfortunately, has zero chance of ever passing Congress.

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