One of the least appreciated but easily-confirmed facts about the current state of the American economy is that the number of Americans employed by the government has gone down under President Obama. But apparently this is news to one the Republican Party’s most prominent tea party conservatives. During a roundtable discussion on ABC this morning over the size and adequacy of the 2009 stimulus, a flabbergasted Sen. Rand Paul (R-KY) asked economist Paul Krugman if he was actually arguing that government employment had gone down under Obama:
PAUL: The thing I don’t understand is that you’re arguing that the government sector is struggling. Are you arguing that there are fewer government employees under Obama than there were under Bush?
KRUGMAN: Of course. That’s a fact. That’s a tremendous fact.
PAUL: No, the size of growth of government is enormous under President Obama.
KRUGMAN: If government employment had grown as fast under Obama as it did under Bush, we’d have a million and a half more people employed right now — directly.
PAUL: Are there less people employed or more people employed now by government?
As Krugman quickly pointed out on his blog, the answer is “less.” Now, perhaps Paul was thinking of employment by the federal government alone, which did tick up just slightly: 2.77 million at the end 2008 versus 2.8 million currently. But add in state and local government jobs, and the hard number for government employment dropped by around 600,000 after Bush left office.
As a matter of fact, the share of jobs in the economy provided by the public sector went up following the 2001 recession under George W. Bush, the 1990 recession under George H.W. Bush, and the 1981 recession under Ronald Reagan. Only after the latest recession, which hit just before Obama took office, did the share of public jobs drop.
In no small part this is due to another point Krugman made — that the stimulus, while large, was inadequate to the country’s needs. This has been particularly true in the area of state aid. Spending cuts at the state level overtook additional spending at the federal level in late 2009 and have been driving a contraction in the public sector ever since.
Rep. Paul capped off his anti-Keynesian argument with the strangely Zen-like assertion that “Roads don’t create business success. It’s the other way around. Business success allows us to build roads.” It’s unclear what this could mean. While tax revenue is dependent on economic growth, the very nature of a depression is a self-reinforcing negative spiral in the private market. Business success is sluggish, meaning employment and income is sluggish, meaning consumers are held back from buying enough goods and services, so business success remains sluggish. The whole point of Keynesian stimulus — of which government employment is one form — is to move money into the hands of consumers by the alternative route of the government and thus reverse the process.
Sen. Paul’s office released a statement — with a corresponding radio interview — responding to the debate with Krugman. It read in part:
The only logical number we could have been discussing was the number of federal workers. Since the last time I checked, Barack Obama was the President, not a mayor or governor. Under President Obama, the federal workforce has grown by 143,000 according to the Labor Department… Yet Professor Krugman added in local and state workers to inflate this number, an irrelevant point at best.
The 143,000 number excludes federal postal workers, and it’s not clear why Sen. Paul’s office would think that exclusion necessary. Including postal workers, as ThinkProgress did, the federal workforce only went up 27,000 between December of 2008 and now — an increase of around one percent. Hardly “enormous” growth.
Nor is it clear why Sen. Paul calls the state and local numbers “irrelevant.” As pointed out above, state and local budgets are deeply intertwined with federal spending, a point even the conservative American Enterprise Institute conceded. And the larger context of Sen. Paul’s disagreement with Prof. Krugman was the economic value of government employment, in which case a state or local job is as good (or as bad, depending on your view) as a federal one.