Yawn: Economy Fails to Notice Sequester
Ever since they were first enacted, liberals have fretted that the automatic sequester cuts would be a drag on the economy. While cuts this year of $85 billion are small in an overall $16 trillion economy, it was argued that they would ripple through the economy and hurt consumer spending and hiring. Friday's jobs report should put these fears to rest.
On Friday, the Labor Department reported that the economy added 165k jobs in April. While this number is below the monthly average for the last 12 months, it was larger than expected. The Labor Department also revised upwards job gains in March and February. Combined 114k more jobs were created in the two months than previously reported. The overall economy remains weak, but the sequester cuts don't seem to be having a dramatic effect.
Partly this is due to how small they are as a share of the overall economy. Cuts to actual spending are about half the widely-reported figure of $85 billion. More than $40 billion of the cuts are from "budget authority," which is the ability of an agency to commit money to spending in later years. Cutting this doesn't reduce actual outlays at all. Even including these, overall government spending will still be higher this year than last year.
The federal government may certainly trim its workforce in the coming months, but it has plenty of room, and need, to do so. Excluding the postal service, there are 120k more federal workers today than when Obama first took office. There are almost a quarter-million more federal workers than 10 years ago.
Liberals generally overstate the impact of federal spending on the overall economy. They do this to argue against any reduction in government spending. Their greatest fear, that government will cut spending and no one will notice, seems to be coming true.
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