CHART: States That Cut The Most Spending Have Lost The Most

I think the problem with gov. jobs is the waste that goes along with it.
PS jobs are always more efficient and produce a return where as gov. jobs produce ?

A tax base? All those government employees pay taxes and buy things, which they won't be doing when they are unemployed. They'll be on unemployment.

BearMtnHIB wrote: No - I don't agree.

Cut it all now.

I don't care how many government jobs are lost, the government should never have grown that big to begin with. Government must now pare back to the level it can afford- just like the private sector is forced to do. We should not ever keep a bigger government for the sake of a government employee.

Government jobs do not add economic activity- or help an economy, in the end it hurts the economy because those dollars must be taken from the private economy where they are used most efficiently.

Massive cuts are neede now- to prepare our financial condition for the economy to prosper in the future. Gradual cuts only prolong the situation into years of bad economic conditions.

The beast wasn't created in a day, and it won't be slain in a day. Our economy does not react well to sudden, large changes. Cutting government drastically would erode consumer confidence and cause a sharp spike in unemployment. Investors would be nervous, and therefore conservative - the markets would drop drastically and a panic would ensue.

Gradual decreases in government spending (not just smaller increases, but actual decreases) would create a feeling that we're heading in the right direction. Consumer confidence (and spending) would increase. Investors would be able to see a long term brighter future, and would take risks based on that. The markets would respond in a positive way.

As the economy improves, cuts could be larger.

I believe that finesse is required here, not brute strength. Besides, we have a better shot at getting a gradual change implemented.

If you look at the last 2-3 years, private jobs plummeted and gov't jobs held steady due to the stimulus bailouts to state and local gov't. Currently, the private sector is recovering and creating jobs slowly again, while the state and local gov'ts are losing jobs now that they have to balance their budgets without help from the Feds. Of course Federal jobs have continued to grow throughout all this, with an unlimited National credit card account. Its going to be a slow and long process. Just like Japan saw for a decade.

8% unemployment will be the new normal "good times".

According to economists, you need GDP of + %5/yr to reduce unemployment 1%/yr You need 2-3%GDP/year to stay even. We are barely at 2% now.

WayneH wrote: And each municipality could hire their own water inspectors. And the airlines could hire their own flight safety people. And large food processors could hire their own food inspectors. What could possibly go wrong?

Actually all food processors do hire their own food inspectors. Our company's worst fear is a recall, very expensive and damaging to sales, so we keep up quality because it is the smart thing to do.

Wayne,
You think goverment inspectors keep us safe? Like the German sprout inspectors? Or the SEC keeping Madoff honest?

We have FDA inspectors visit us every now and then, but the ones that spur the most action are our private ISO inspectors. Companies paying private firms to make sure quality standards remain high, instead of taxpayers paying bureacrats who spend more time viewing porn than investigating suspicious activity.

Our economy does not react well to sudden, large changes. Cutting government drastically would erode consumer confidence and cause a sharp spike in unemployment. Investors would be nervous, and therefore conservative - the markets would drop drastically and a panic would ensue.

I got news for ya- Investors are nervous, and therefore conservative- and our economy is in serious trouble.

Yes- Joe is correct, like Japan - we will not see growth again until the policies change in favor of business and investment.

No - our economy does not react well to sudden, large changes. But that's exactly what we need to do- get the pain over with so the market can find a clear bottom and start uphill again.

A perfect example of this is how the government and banks are handling the housing crisis. By holding onto millions of bad mortgages and forclosed property- the real estate market is being handled just as suggested- slow gradual changes propping up (falsely) the value of real estate. As a result- the bad market will drag on for years, property valus will continue to fall - investors will continue to wait until there is a true market bottom.

This could take years- or it could all be over with by now. If the merket were allowed to drop to the true valus- we would already have investors and first time home buyers purchasing homes again.

This thing would already be over! This recession - may have dipped down further- but it would be over if the government would simply have done nothing at all. No bail outs- no stimulis packages- this recession would be history - and the proof lies all over the world where economies are growing again.

Bush should have hired your as the economy czar back when this this started, before he signed TARP, since you seem to know the answer.

I'm not the only one with this viewpoint- many economists and politicians have said the same thing.

And yes- Bush screwed up royally, he stabbed the free market in the back.

He violated the cardinal rule of moral hazard- I can never forgive that grave error.

I supported TARP, we were looking at the collapse of Wall Street and most of the credit available in the world, it would have been quite tragic, but when do we turn off the tap of QE2, etc?

Guess what- the collapse of Wall Street would not have ment that much to the working American, and it would have snapped back in record time without any help at all. The free market is the fastest, most efficient way to reassemble a mismanaged business, even a wall street business. The assets would have been bought and Wall street would have barely missed a beat.

As far as the available credit- where is it now? There is no available credit.