Friday, February 25, 2011

State spending cuts make the recession worse

 WASHINGTON (AP) — Deeper spending cuts by state and local governments weighed down U.S. economic growth in the final three months of last year. The government's new estimate for the October-December quarter illustrates how growing state budget crises could hold back the economic recovery.
The Commerce Department reported Friday that economic growth increased at an annual rate of 2.8 percent in the final quarter of last year. That was down from the initial estimate of 3.2 percent.
The weaker figure was disappointing and prompted some economists to lower their forecasts for economic growth in the current January-March quarter. State and local governments, wrestling with budget shortfalls, cut spending at a 2.4 percent pace. That was much deeper than the 0.9 percent annualized cut first estimated and was the most since the start of 2010.
State spending cuts are the wrong way to go. They don’t work.
You can’t cut your way out of the recession. Cutting jobs makes the recession worse. Just look at the current situation of Ireland and Great Britain. You can see what a budget cut approach produces- stagnation.  This is what California is producing. See the story above from the Associated Press.

We need to build the promise of California.  That promise is a good job for all,  the opportunity to have  a rewarding career, and the chance for a good education.  The tax and budget cut mania  does not promote good jobs, rewarding   careers.  It only digs the hole deeper. Cutting k-12 and higher education makes matters worse.

So, we need to put teachers, firefighters, nurses, police back to work and stop cutting these jobs.  Then, they will buy groceries, gasoline, pay rent, buy houses, and create private sector jobs.  It is called demand.  You can’t cut your way out of the recession. Cutting jobs makes the recession worse. Just look at the current situation of Ireland and Great Britain. You can see what a budget cut approach produces- stagnation. 
See my post here  “An Open Letter to Governor Brown “  http://www.blogger.com/posts.g?blogID=11455634 providing a list of revenue sources to allow California to grow needed jobs.
We need to repeat this message over and over again, in all available venues.
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