Teachers Represent Shovel Ready Jobs

Posted by Michael A. Kamperman on March 5, 2012

Paul Krugman has written an interesting column http://www.nytimes.com/2012/03/05/opinion/krugman-states-of-depression.html?_r=1&adxnnl=1&adxnnlx=1330946519-fhHzrROxHg/Lh0Q5ykrFxQ  in this mornings NYT comparing the growth of all federal, state, and local government spending in this depression to the growth of all government spending at the same point of the Reagan recovery in the early-mid 1980′s.  Krugman points out that all levels of government spending adjusted for inflation under President Reagan grew 10.2% in the first 10 quarters of his recovery.  Under President Obama government spending grew just 2.6%, which includes the $787 billion stimulus plan.  Here is Krugman’s key takeaway:  ”in reality Reagan was much more Keynesian than Mr. Obama, faced with an obstructionist G.O.P., has ever managed to be.”  Actually, Reagan was a Keynesian and Obama is not one.  Reagan embraced supply side economics so that he could push through tax cuts to stimulate the economy rather than social welfare spending.  But tax cuts that are not offset with spending reductions are a Keynesian form of economic stimulus.  Lower tax rates at the federal level allowed states to raise taxes to maintain services.  President Reagan may not have talked the Keynesian talk, but he walked the Keynesian walk.  Additionally, under Reagan there was not a total and sustained collapse in housing values gutting property tax revenues to State Treasuries.  President Obama, on the other hand, is still campaigning on raising taxes on the wealthy to pay for parts of the budget.  President Obama laments the lack of shovel ready jobs to stimulate the economy.  He seems to find himself vascillating back and forth between Keynesian and Austrian ideas on economic policy.

But we have shovel ready jobs; teachers, police, and firemen.  The local Waco School District has just voted to close 9 schools to save money.  This is because of the Perry for President spending cuts made by the State Legislature last spring.  School closings and teacher layoffs have occured all over the country.  Most of the school districts in our area are not laying off teachers, but have instead instituted hiring freezes.  Young teachers that recently graduated are having great difficulty finding a job everywhere.  The President proposed more money for education, but he quickly abandoned the fight.  He never said we should abandon pay-as-you-go rules to puh through the education spending.  The only truly Keynesian stimulus we have received since the original stimuls bill was the extension of the payroll tax cuts for 2012.  But both sides simply wanted to end the fight and get out on the campaign trail.

At the beginning of the year I wrote that I wanted to take a chance on a candidate who might prove to be a closet Keynesian.  After getting to hear more from Gingrich, Santorum, and Romney I remain convinced that only Gingrich has the possibility of putting in place true Keynesian style policies that could turn the economy around ala President Reagan.  Gingrich constantly emphasizes using Reagan’s economic policies as a model to turn the economy around.  He already knows that government spending grew much more rapidly under President Reagan than it has under President Oabama.  He already knows the trade-offs that were necessary to raise fiscal spending and lower taxes.  Afterall, he was there in the trenches.  There is no evidence President Obama will become a full-throated Keynesian after the election.  If he wins, then I hope my assessment is proven wrong because the teachers will still be shovel ready.