Calculated Risk - Public and Private Payrolls Under Bush and Obama

A big difference between Mr. Bush’s tenure in office and Mr. Obama’s presidency has been public sector employment. The public sector grew during Mr. Bush’s term (up 1,748,000 jobs), but the public sector has declined since Obama took office (down 718,000 jobs). These job losses have mostly been at the state and local level, but they are still a significant drag on overall employment.

Another important difference: I started warning about the housing bubble in 2004, and I started this blog in January 2005 - the beginning of Mr. Bush’s 2nd term.  My focus in 2005 was on the housing bubble and coming recession.  Now - at a similar point in Mr. Obama’s tenure - I expect the economy to continue to expand, so I don’t expect a sharp decline in employment as happened at the end of Mr. Bush’s 2nd term.

Bloomberg News:

Sequestration, the automatic, across-the-board spending reductions triggered last month after U.S. lawmakers failed to agree on a debt strategy, has cast a shadow of uncertainty over public funding for medical research. That work often serves as the basis for new treatments and strategies from drugmakers such as Pfizer Inc. (PFE) and device makers such as Johnson & Johnson. (JNJ)

“We were ready to get them out the door” for genetic analysis, said Riggins, referring to the tumor samples now “still sitting in the freezer.”

In anticipation of sequestration, the National Institutes of Healthbegan trimming 10 percent off existing grants at the beginning of the fiscal year, director Francis Collinssaid in a Feb. 25 briefing. Now that it’s reality, the NIH is facing a 5.1 percent decrease in its 2013 budget, or about $1.6 billion.

A great example of (1) how the private sector benefits from public spending directly and (2) how irresponsible the sequester is, both in how large it is and how it is being conducted.

pbstv:

The Iraq War: How We Spent $800 Billion (and Counting)
The Iraq war cost twice as much as the war in Afghanistan, and more than 16 times as much as the Bush administration predicted. But what did we pay for?
Dive deep into FRONTLINE’s new interactive to break down the cost of the Iraq War.

pbstv:

The Iraq War: How We Spent $800 Billion (and Counting)

The Iraq war cost twice as much as the war in Afghanistan, and more than 16 times as much as the Bush administration predicted. But what did we pay for?

Dive deep into FRONTLINE’s new interactive to break down the cost of the Iraq War.

(Source: pbs.org)

"

Here’s how: The former Republican vice presidential candidate’s budget eliminates ___ loopholes in the tax code, cutting the ___ and the ____ deductions. It reduces spending on the ____ program by _____ and the _____ program by _____. Retirees would see ____, students would experience ____ and the poor would be _____.


There are so many blanks in Ryan’s budget that it could be a Mad Libs exercise. But this is not a game. It’s black-box budgeting — an expression of lofty aims, with binders full of magic asterisks in lieu of specific cuts to government benefits. If this were a fitness plan, Ryan, a former personal trainer, would be telling Americans that under his revolutionary program, they could lose 50 pounds in 10 weeks without dieting or working out.

"

— Dana Milbank on Paul Ryan’s Magical Budget

Lori Aratani

The nation’s crowded transportation system is already feeling the effect of billions of dollars in automatic federal budget cuts, with long waits at some international airports and signs that cargo may begin stacking up on seaport docks because inspectors are working fewer hours….

The slowdowns are among the first tangible effects of the automatic budget cuts known as the sequester, which began to take effect Friday and will carve $86 billion from domestic and defense programs over the next seven months….

Officials at the National Retail Federation said they have been told that the cutbacks could mean delays of up to five days or more in moving containers through ports. That would mean longer waits for retailers expecting spring merchandise as delays ripple through the transportation system.

"The Republicans have a remarkably incoherent position on the sequester: It is a terrible policy that must be replaced with a cuts-only solution, they say, but there is no actual GOP plan that fits this description. Republicans seem to be hoping that President Obama will negotiate with himself until they are satisfied."

Hilary Rosen on sequestration

"Both Barack Obama and the Republican party deserve blame. It is still not too late to set US fiscal policy on a saner track. Mr Obama is right to insist the sequestration be replaced by a more balanced package of revenue increases and spending cuts that would be phased in over a longer period. The US recovery is still too fragile to take this kind of hit in one go."

— The Financial Times Editorial Board on $85 billion in cuts set to take effect on Friday, March 1. 

Neil Irwin: 

Through 2008 and 2009, it shows, the private sector in the United States was contracting on a huge scale. Consumer spending, business investment and residential investment all were plummeting. At that time, government spending soared, both from the fiscal stimulus package enacted at the start of 2009 and automatic increases in social welfare programs that kick in when the economy is weak, like unemployment insurance benefits.
Since then, the private sector has been expanding. But the public sector has been simultaneously pulling back. That includes state and local governments slashing spending to balance their budgets, the expiration of federal stimulus, and starting in 2011 deficit-reduction policies arrived at as part of a deal to raise the federal debt ceiling.
The question now is which will be more powerful in 2013: The underlying strength of the private sector, or the contractionary effects of further fiscal austerity.

Neil Irwin

Through 2008 and 2009, it shows, the private sector in the United States was contracting on a huge scale. Consumer spending, business investment and residential investment all were plummeting. At that time, government spending soared, both from the fiscal stimulus package enacted at the start of 2009 and automatic increases in social welfare programs that kick in when the economy is weak, like unemployment insurance benefits.

Since then, the private sector has been expanding. But the public sector has been simultaneously pulling back. That includes state and local governments slashing spending to balance their budgets, the expiration of federal stimulus, and starting in 2011 deficit-reduction policies arrived at as part of a deal to raise the federal debt ceiling.

The question now is which will be more powerful in 2013: The underlying strength of the private sector, or the contractionary effects of further fiscal austerity.

Via Ezra Klein, at Wonk Blog:

The American health-care system is simply uniquely inefficient. Typically, it’s liberals railing at this fact, but the result is, to a degree that’s almost universally unappreciated, a disaster for conservatives. The U.S government spends more than any other government on health care and is thus much larger than it might otherwise be. That spending also increases our deficits and requires higher taxes. So we’re getting the downsides of government-run health care without the upsides of universal coverage, lower cost  and clear lines of accountability.
Obamacare will mostly fix the universal coverage problem, but it won’t fix the cost problem. The reason other countries spend less is that their governments set the prices, and they set them low. The reason we spend so much more is largely because our prices are higher, and by leaving private insurers and medical providers in charge of deciding prices, we’re not doing anything about that in Obamacare.

Via Ezra Klein, at Wonk Blog:

The American health-care system is simply uniquely inefficient. Typically, it’s liberals railing at this fact, but the result is, to a degree that’s almost universally unappreciated, a disaster for conservatives. The U.S government spends more than any other government on health care and is thus much larger than it might otherwise be. That spending also increases our deficits and requires higher taxes. So we’re getting the downsides of government-run health care without the upsides of universal coverage, lower cost  and clear lines of accountability.

Obamacare will mostly fix the universal coverage problem, but it won’t fix the cost problem. The reason other countries spend less is that their governments set the prices, and they set them low. The reason we spend so much more is largely because our prices are higher, and by leaving private insurers and medical providers in charge of deciding prices, we’re not doing anything about that in Obamacare.

From “The 13-Year War" on American Prospect:

To date, we’ve spent over half a trillion dollars in Afghanistan, a figure that includes only the direct yearly costs for both military expenditures and civilian aid. It doesn’t include the cost of replacing materiel and weapons used in Afghanistan, nor the long-term costs of caring for the thousands of servicemembers who were wounded there. Those factors will add hundreds of billions of dollars to the tally in the years to come. And today, keeping a single servicemember in Afghanistan costs upward of a million dollars per year.

From “The 13-Year War" on American Prospect:

To date, we’ve spent over half a trillion dollars in Afghanistan, a figure that includes only the direct yearly costs for both military expenditures and civilian aid. It doesn’t include the cost of replacing materiel and weapons used in Afghanistan, nor the long-term costs of caring for the thousands of servicemembers who were wounded there. Those factors will add hundreds of billions of dollars to the tally in the years to come. And today, keeping a single servicemember in Afghanistan costs upward of a million dollars per year.