"Without GOP Austerity, Economy Would Be Recovering At Pace Of ‘Reagan Recovery’"
Ignoring the warnings of economists and clear evidence in Europe that austerity would only hold back an economic recovery, Republicans in Washington have pushed for deep spending cuts and other austerity measures. One side effect of those spending cuts is that state and local governments, already facing budget crunches because of the slow economy, have been forced to make even deeper reductions to their own budgets. Hundreds of thousands of public sector employees — teachers, police officers, and firefighters included — have lost their jobs as a result of those cuts.
The economy is now slowly recovering, enough that Republicans are left just criticizing the pace of the recovery, not its existence. But without the GOP-backed austerity measures and the job losses they’ve caused, the recovery would be moving at the speed of the Reagan recovery of the 1980s, according to an analysis from economist Paul Krugman:
In fact, if it weren’t for this destructive fiscal austerity, our unemployment rate would almost certainly be lower now than it was at a comparable stage of the “Morning in America” recovery during the Reagan era. [...]
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.
And once you take the effects of public spending on private employment into account, a rough estimate is that the unemployment rate would be 1.5 percentage points lower than it is, or below 7 percent — significantly better than the Reagan economy at this stage.
At this point in the Reagan recovery, Krugman notes, government purchases rose 11.6 percent; they’re down 2.6 percent under Obama. During the Reagan recovery, government employment rose 3.1 percent; under Obama, it is down 2.7 percent. Under Obama, government spending rose 2.6 percent during the first two-and-a-half years of the recovery, compared to a 10.2 percent rise under Reagan.
Despite those numbers, Republicans continue to blame “out of control spending” and a growing federal government for holding back the economy, holding Reagan’s recovery up as an example of the success of the party’s policies. As Krugman’s analysis shows, however, Reagan’s recovery wasn’t constrained by the austerity measures that are now barreling Europe toward a second recession and preventing the U.S. economy from growing at a faster pace.