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How Government Gridlock is Actively Hurting the Economy

Most reporting on today’s employment report will lead with the fact that the economy added 80,000 jobs in June. But that number combines two distinct sectors of the economy—jobs added in the private sector and jobs lost in government. Employment growth in the private sector reflects how businesses feel about the economy. And while the rate of growth is moderate, it is steady and broad-based, with most industries adding jobs.

By contrast, the public sector continues to shed jobs. This is the direct result of deliberate policy decisions to get rid of teachers, firefighters, and police officers, and other valuable workers essential to our communities. Over the last year, governments have shed a total of 169,000. The previous year was even worse, as governments shed 626,000 workers. If we still had all of these jobs today our national unemployment rate would be between a half and a full point lower.

But that’s not even the right comparison, because we usually rely on government as an engine to pull us out of recession. Government isn’t just on the sidelines, it’s actually harming the recovery. To be clear: Much of this is the result of actions taken by state and local governments, although if Congress had provided fiscal stimulus, many of these job cuts could have been prevented.

Right now both political parties are shouting at each other that they don’t have a plan to fix the economy. It ought to be clear that we need a two-handed solution: Steps to encourage more hiring in the private sector and fiscal measures to stop the loss of jobs in the public sector.

But we also need to demand that our politicians respond directly to each other’s policy proposals. A case in point is the bill that President Obama submitted to Congress last September. Many of the proposals were originally Republican ideas, yet Republicans have refused to discuss why they are uninterested in trying these suggestions. While I am biased—I worked on part of the bill—it’s the failure to have a serious discussion of Obama’s plan that shows that Congressional Republicans are failing us.

However, there’s one area where both sides have staked out clear positions: government job loss. Obama has called on Congress to pass legislation to stem layoffs of state and local government workers and rehire some of the thousands of teachers, firefighters, and police officers who have already been let go. Romney has taken the opposite position by arguing for further cuts in government. While politicians and economists debate what fiscal austerity means for the economy, it’s clear what it means for families: less investment in our children and communities.

Betsey Stevenson is a former Chief Economist at the Department of Labor under President Obama and a visiting Assistant Professor at Princeton University.