Subject: CHART: States That Cut The Most Spending Have Lost The Most Jobs
From: "Michael Andrews" <[email-masked]>
To: "Hunter Biden" <[email-masked]>, "Eric Schwerin" <[email-masked]>
Date: Wed, 29 Jun 2011 10:58:11 -0400

CHART: States That Cut The Most Spending Have Lost The Most Jobs
By Guest Blogger on Jun 27, 2011 at 2:15 pm
Our guest blogger is Adam Hersh, an economist at the Center for  
American Progress Action Fund.

Govs. John Kasich (R-OH), Rick Snyder (R-MI), and Scott Walker (R-WI)
There’s a new cult of economic thought sweeping the nation — or at  
least many Republican (and even some Democratic) political circles.  
Its adherents cling to the erroneous belief that sharp government  
spending cuts will revitalize economic growth and create much needed  
new jobs
Speaker of the House John Boehner (R-OH) is an ardent follower of this  
Cut-Grow cult, as are a number of high profile governors. For  
instance, Gov. John Kasich (R-OH) declared, “We’re going to have to  
reduce spending…to create a platform for economic growth.” When Gov.  
Chris Christie (R-NJ) delivered his budget to the state Legislature he  
argued, “We must continue to cut government spending” to create jobs  
and prosperity for New Jersey families. Gov. Scott Walker (R-WI) vowed  
his budget “lays [the] foundation to create jobs.”
Now these Republicans want the American public to drink a giant glass  
of their Cut-Grow Kool-Aid. But the data actually show the opposite of  
their claims to be true: steep spending cuts are hampering economic  
recovery in some states, while other states that resisted cuts or  
increased spending are now seeing declining unemployment rates, faster  
private-sector job creation, and stronger economic growth.

 From the start of the Great Recession in December 2007 through the  
end of 2010, 24 states have cut government spending by an average of  
7.5 percent after adjusting for inflation. Another 25 states have  
expanded government outlays by an average of 11 percent. (The analysis  
excludes Alabama due to data problems reported by the National  
Association of State Budget Offices). And the differences in these  
states’ economic performance could not be more self-evident. Relative  
to national economic trends, states that increased spending enjoyed on  
average:
0.2 percentage point decrease in the unemployment rate
1.4 percent increase in private employment
0.5 percent real economic growth since the start of the recession
In contrast, states that cut spending saw on average
1 percentage point increase in the unemployment rate
2.1 percent loss of private employment
2.9 percent real economic contraction relative to the national  
economic trend
Steep state spending cuts have gone hand-in-hand with rising  
unemployment rates, falling private-sector payroll employment, and  
lower growth in state’s gross domestic product, or GDP — the sum of  
all goods and services produced by labor and equipment in each state,  
less imports.
Take private sector jobs, for example. This graph shows that state  
spending is not just about jobs for public service workers, but also  
has far reaching consequences for private businesses and their  
workers. The downward sloping red line shows the relationship between  
cuts to state spending and changes in private sector employment  
relative to the national average since the start of the Great  
Recession. States that cut spending are seeing significantly more job  
losses in the private sector than states maintaining or increasing  
spending levels. For every 10 percent cut in state spending, state  
economies lost 1.6 percent of their private-sector jobs.
Certainly policymakers should seize every opportunity to eliminate  
waste and improve the efficiency of delivering government functions.  
But spending cuts achieved or championed by conservatives are aiming  
much deeper at public services and public investments critical to  
economic recovery now as well as the future of U.S. economic growth  
and competitiveness.