Unemployment: Republicans No Help


The Republican-controlled Florida House and Senate voted to increase unemployment by cutting 4,492 state jobs. They also plan to spend 700 million less than last year. They did exactly the opposite of what most economists would do, and of course their rookie Tea Party Gov. Scott, approved of their misguided policies.

Florida Republicans should certainly know we are not out of the Great Recession, which started in 2008, when George Bush was President. What is unclear is whether they have any clue as to how to get out of it, or worse yet, whether they care. While no one expects all of them to have a college degree in economics, they should at least have studied the subject, before taking office.

When a local economy is stagnant, as ours is, state government can apply Keynesian economics, to stop high unemployment from becoming chronic. Florida could have created employment by spending more, not less. They could have used fiscal policy to grow the economy out of the recession, by creating jobs.

It is almost like the right hand does not know what the left hand is doing. While President Obama and the federal government are doing the right thing by spending for the purpose of stimulating the economy, the Florida Republicans are doing the wrong thing by budgeting less and causing more unemployment in a recession.

Unemployment not only hurts the unemployed, it harms the entire local economy. When unemployment remains high, buying and selling declines. One ripple effect is a decrease in state sales taxes. If the Republicans had increased spending, through fiscal policy, jobs would have increased. This in turn would have stimulated buying and selling, and would have increased sales tax revenues.

While the Republicans gave away 60 million in tax cuts to businesses, and forfeited another 37 million, by raising corporate income tax exemptions, from $5,000 to $25,000, there is no guarantee any of this will increase investment, or generate jobs. If wealthy taxpayers remain timid on new investments, and instead save money, there will be no resulting increase in employment.

There would have been no better public works investment project, to cure the ill effects of the recession, than the high-speed rail plan our governor foolishly rejected. Florida could have used federal dollars to construct a railroad, and could have stimulated all kinds of jobs. It’s sad, but Scott just doesn’t understand economics.

Public works projects are a much more direct and certain way of stimulating employment. During the Great Depression that started in 1929, the government provided public sector employment that stimulated the economy. Unemployment dropped from 23.6% (1932), to 16.9% (1936), and down to 14.6% (1940), before WWII itself finally brought about a full employment economy.

Next year, when the Republican Party is in Tampa for their National Convention, I am sure they will complain about Obama. When they say the President did not create enough jobs, I hope the St. Petersburg Times will remember to ask why they voted to directly eliminate state jobs, spent millions less during the Great Recession, and thwarted Obama’s efforts to turn things around.

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