Regular readers of this blog will find this no surprise, but it’s nice to see it on the front page of a daily newspaper:
The federal government, the nation’s largest consumer and investor, is cutting back at a pace exceeded in the last half-century only by the military demobilizations after the Vietnam War and the cold war….Federal, state and local governments now employ 500,000 fewer workers than they did on the eve of the recession in 2007, the longest and deepest decline in total government employment since the aftermath of World War II.
….The spending cutbacks and actions to raise taxes could reduce growth by roughly 1.5 percentage points this year, according to the Congressional Budget Office, leaving the sluggish economy operating well below capacity.
The basic chart is below. If the recession of 2007-08 had been a normal one, the cutbacks we’re seeing now might have been justified after the initial round of stimulus. But it wasn’t a normal one. It was the deepest economic slowdown since the Great Depression. It’s suicidal that we pulled back so soon.