The American economy added 236,000 jobs in February and the unemployment rate dropped to 7.7 percent, its lowest level since the end of 2008. Job creation was bolstered by growth in housing and health care as well as aggressive monetary policy from the Federal Reserve, but the economy now faces the threat of sequestration, the automatic budget cuts that went into effect March 1.
The Congressional Budget Office estimates that sequestration will cost the economy 750,000 jobs and knock more than half a point off of economic growth in 2013, threatening the economy that, while still plagued by high unemployment, is slowly chugging toward a recovery. And while Republicans argue that sequestration and other spending cuts are necessary to rein in America’s out-of-control spending, government spending has actually plateaued since President Obama took office:
Past recoveries have been bolstered by government spending and this one initially was too, thanks to the stimulus bill Obama signed into law in 2009. Premature deficit reduction efforts and the perpetual crises caused by Republican demands to cut spending at every turn have, however, hamstrung the recovery ever since:
Government employment has shrunk by more than half-a-million jobs since Obama took office, the worst period of job losses in that sector since World War II. Governments lost another 10,000 jobs in February and that number will almost surely rise in subsequent months as further spending cuts take effect. If the government employed as many people as it did in 2008, unemployment would be 7.2 percent; if government employment had grown as steadily as it has in the past, the unemployment rate would be at least a full point lower.
With borrowing costs at historic lows and growth still lagging, now would be a perfect time for the United States to avoid sequestration altogether and invest in infrastructure and other job creation efforts in order to grow the economy and avoid the fate that has befallen austerity-obsessed European countries, which are now experiencing second (and even third) recessions.
Instead, Republicans have repeatedly blocked efforts to make the investments the economy desperately needs and Washington has remained convinced that America’s problem is that the government is spending too much, even as economic reality shows that the only spending problem America has is that the government isn’t spending enough.