McDonnell: Economy Improving Thanks To GOP Governors, Not Obama

Virginia Gov. Bob McDonnell (R), a Mitt Romney surrogate, said Sunday that the improving economic situation is thanks to Republican governors, not President Obama.

"Look, I'm glad the economy is starting to recover but I think it's because of what Republican governors are doing in their states. Not because of the president," McDonnell said on CNN's State of the Union.

"It's been a complete failure of leadership," he said of Obama.

McDonnell added that Romney is "on a roll" and that the electoral "math is lining up very well for" him after his resounding victory in Saturday's Nevada GOP contest.

http://livewire.talkingpointsmemo.com/entries/mcdonnell-economy-improving-thanks-to-gop-governors-not

Destructive Austerity, USA

Jared Bernstein has been emphasizing, rightly, the extent to which our weak recovery is being undermined by cutbacks at the state and local level:



But it’s even worse than he says. Why? Because if you look at what’s being cut, it’s heavily focused on investment:

- more -

http://krugman.blogs.nytimes.com/2012/01/29/destructive-austerity-usa/

What a Drag, Part 2

Yesterday I wrote about the economic drag caused by squeezed state and local budgets, posting a figure that showed the loss to overall GDP caused by state/local contractions. Today, I’ve added state and local job losses to that picture.

The figure below just plots the same data as in the last figure—the annual percentage point contribution or subtraction to real GDP growth from the state and local sectors. But it adds annual gains or losses in jobs.



As you can see, it’s a very tight fit. Last year, state and local squeeze shaved about 0.3% off of GDP and cost 266,000 jobs. A simple regression of state/local job losses on the GDP contribution finds that for every point of growth that the states and locals take off of GDP, employment in the sectors falls around 700,000.

We generally recognize that GDP losses map onto job losses but the fit is not usually this tight—there are lags in the generalized relationship between growth and jobs and lots of other moving parts. But that’s less the case in state and local governments. Here, the chain of events is pretty obvious and pretty clear. You squeeze their budgets, it shows up quickly and directly in growth and jobs.

- more -
http://jaredbernsteinblog.com/what-a-drag-part-2/

Local Governments Still a Drag on the Economy

Posted by: Nicholas Johnson

Today’s encouraging jobs report would have been even more encouraging if local governments weren’t still slowing the economic recovery.

Local governments — mostly school districts — cut another 11,000 jobs last month. Total job losses at the state and local government levels have reached 668,000 since employment in this category peaked in August of 2008.




To put these figures in historical context, it’s useful to separate education workers (teachers, librarians, administrators, and so on in public schools, colleges, and universities) from other state and local workers (police, firefighters, garbage collectors, bus drivers, and so on). The education side of state and local employment has employed more people than the non-education side since the early 1990s, in part because of state education reforms that increased teacher hiring.

However, the public education workforce has shrunk over the last three years to its lowest level, relative to the U.S. population, since the late 1990s (see chart). The non-education state and local public workforce has shrunk to its lowest level since the mid-1980s.

- more -

http://www.offthechartsblog.org/local-governments-still-a-drag-on-the-economy/