The Kroog Versus The Paradox Of Myth

The myth of Obama's "massive increase in federal government", that is.  The reality is much more sobering as Paul Krugman points out (emphasis mine):

Consider, in particular, one fact that might surprise you: The total number of government workers in America has been falling, not rising, under Mr. Obama. A small increase in federal employment was swamped by sharp declines at the state and local level — most notably, by layoffs of schoolteachers. Total government payrolls have fallen by more than 350,000 since January 2009.

Now, direct employment isn’t a perfect measure of the government’s size, since the government also employs workers indirectly when it buys goods and services from the private sector. And government purchases of goods and services have gone up. But adjusted for inflation, they rose only 3 percent over the last two years — a pace slower than that of the previous two years, and slower than the economy’s normal rate of growth.


So as I said, the big government expansion everyone talks about never happened. This fact, however, raises two questions. First, we know that Congress enacted a stimulus bill in early 2009; why didn’t that translate into a big rise in government spending? Second, if the expansion never happened, why does everyone think it did?

Part of the answer to the first question is that the stimulus wasn’t actually all that big compared with the size of the economy. Furthermore, it wasn’t mainly focused on increasing government spending. Of the roughly $600 billion cost of the Recovery Act in 2009 and 2010, more than 40 percent came from tax cuts, while another large chunk consisted of aid to state and local governments. Only the remainder involved direct federal spending.

And federal aid to state and local governments wasn’t enough to make up for plunging tax receipts in the face of the economic slump. So states and cities, which can’t run large deficits, were forced into drastic spending cuts, more than offsetting the modest increase at the federal level. 

And that's why the stimulus didn't work as nearly as well as it should have.  As a matter of fact, all it did was prolong the prevention of massive job losses at the local and state government level, losses we're now beginning to see.  September's increase of 64,000 private sector jobs was more than offset by the loss of over 100,000 local and state government employees last month.  That's been going on for quite some time now.  Yes, this year the country has created hundreds of thousands of private sector jobs, but they have been countered by the loss of teachers, police, firefighters, clerks, administrators, engineers, drivers, public defenders, you name it.   That's why we've been treading water for the last 8 months on the unemployment rate.

Obama has presided over the largest number of government job cuts in decades, folks.  And the pain is just beginning.