In effect, a large part of our political class is showing its priorities: given the choice between asking the richest 2 percent or so of Americans to go back to paying the tax rates they paid during the Clinton-era boom, or allowing the nation’s foundations to crumble — literally in the case of roads, figuratively in the case of education — they’re choosing the latter.
It’s a disastrous choice in both the short run and the long run.
In the short run, those state and local cutbacks are a major drag on the economy, perpetuating devastatingly high unemployment.
It’s crucial to keep state and local government in mind when you hear people ranting about runaway government spending under President Obama. Yes, the federal government is spending more, although not as much as you might think. But state and local governments are cutting back. And if you add them together, it turns out that the only big spending increases have been in safety-net programs like unemployment insurance, which have soared in cost thanks to the severity of the slump.
That is, for all the talk of a failed stimulus, if you look at government spending as a whole you see hardly any stimulus at all. And with federal spending now trailing off, while big state and local cutbacks continue, we’re going into reverse.
I'd add, also, that we wasted stimulus money on crap like $237 billion in individual tax cuts and $51 billion in tax cuts for businesses. Tax cuts haven't wowed me as a job creator or an economic stimulator, but we apparently needed to appease the free market fairies to overcome a Republican fillibuster. Whatever.