Christian Schneider

Author, Columnist

The $680 Million Press Release

Yesterday, Governor Doyle’s administration gleefully reported that 8,284 jobs had been “created” or “retained” due to the federal stimulus money received in the most recent state budget.  The key word here is “retained” – because much of the funds the state spent merely displaced state general funds, which had been used to pay for state government prior to the economic downturn.

For instance, the final budget increased state funding for public schools by nearly $250 million in federal stimulus aid, then reduced the state share by the same amount.  So it’s basically business as usual, just with a different funding source.

In effect, the state took out a one-time loan in order to keep government workers in their jobs.  It would be like using a credit card to make your car payment, then patting yourself on the back for your achievement in “auto retention.”  (Ironically, the Legislature is making a big push to shut down so-called “payday lenders,” who they believe prey on the desperate.  No word on how this differs at all from the state running to the federal government for quick cash to keep buying their groceries.)

So congratulations to Governor Doyle and all the legislators who had the courage to go to Washington on their hands and knees and beg for an infusion of one-time stimulus money.  We’ll see how many self-congratulatory press releases they’re sending out during the next budget while they’re raising taxes to “retain” these jobs when there’s no more stimulus cash.

5 Comments

  1. Short-term thinking on your part.

    Would you rather these govt professionals got laid-off and went on unemployment? Also, think about the costs the State would incur when time came to rehire those lost (if the most qualified didn’t go somewhere else), and what about the (property) value created by these workers while doing their jobs.

    So tired of the Grover Norquist right-wing fringe and their “less govt is more” ideology. Perhaps you would rather the stimulus funds were not accepted?

  2. JPK:
    Typical response from someone who doesn’t have a clue. So we’re better off hiring GOVERNMENT people instead of PRIVATE SECTOR? What a hoot!

    You (and your ilk) just don’t get it. It’s the PRIVATE SECTOR that pays for government, not the other way around. And I’m supposed to feel sorry for a government worker looking elsewhere or joining the unemployment line? And how many GOVERNMENT employees have been let go lately?

    And so what if they get hired by the private sector? We’re supposed to protect jobs in the government while people are losing their jobs?

  3. Macroeconomic research indicates that public spending – yes, even on public employee salaries – can indeed stimulate GDP, property values, and even private sector job growth.

    I guess all those economists don’t have a clue either.

    At the same time, the stimulus package was not perfect. I wish more would have been spent on local infrastructure. But I won’t bash the overall success of the stimulus, and I won’t lament using stimulus funds to replace lost state revenue.

    Remember, macroeconomic research is very clear on this: sudden decreases in public spending are more harmful to local/state economies than tax increases.

  4. I’d love to see the case studies on that, JPK. Actually, I’d love to see a case where there has been a significant enough drop in public sector spending worth studying.

  5. @James Wigderson- There are lots of papers out there, and many using quantitative methods, not just case studies. Do a search on google scholar to find them.

    Stephen Deller & Craig Maher have done lots of work on this and is a good place to start. Here’s a couple articles using WI data:

    http://econpapers.repec.org/paper/eclwisagr/482.htm

    http://www.reeis.usda.gov/web/crisprojectpages/210069.html

    Bottom line: public spending is essential for economic growth.

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