I believe this is one of the most important lines in the report they released.

quote
Federal government employment rose in January, partly due
to hiring for the decennial census. Employment in state and
local governments, excluding education, continued to trend down
over the month.

http://www.bls.gov/news.release/pdf/jec.pdf

With one in four jobs tied to government spending, we may focus too much on the Federal numbers. It is the cities and states and the number of people they lay off and the spending they cut that hits private sector businesses hard.

This causes another down cycle in tax revenues for cities and states which is why many are raising taxes.

The Federal government can cut taxes but, if the cities and states are raising taxes, it counters any stimulus efforts by the Fed using tax breaks.

When cities and states cut spending, all the companies that sell asphalt, copiers, vehicles, paper clips, contract services, etc. get hit. Think of the cuts some are making in education that consumes a lot of things purchased from private sector companies. Cut police, fewer police cars purchased and equipped.

One reason the stimulus spending is having such a hard time making progress is that it is what happens in cities and states and their tax revenues and their employment and their debt and interest on debt and their citizens and business debt and lower wages and higher taxes, that hits the average person the hardest.

This crisis is not something that can be fixed. It had to avoided decades ago. We have used more and more debt and inflation to cover up the flaws in our economic and monetary policies until we are reaching the end of our rope. Without a bubble, since it now takes bubbles to even create an illusion of growth, we will have a hard time delaying a depression for much longer.

As the last Comptroller General, David Walker stated, we could have double digit growth for decades and still not get out of this mess.

We can’t grow out of this and we can’t tax out of this. We have to cut spending but, the major sources of spending that account for over $2 trillion aren’t even being considered. Defense, Health an Human Services (one place employment has been rising demanding even more from tax revenues), Social Security (record applications for early retirement) and interest on debt which is expected to quadruple to $800 billion as interest rates return to normal eventually, means the deficits grow while more business leaves for growth nations and our deficits remain above $1 trillion for a decade or more.

Yet, if the President or Romer got on TV and told the truth, they could cause a panic that would send us into a depression now. Does that justify not telling the full story? You decide and vote accordingly but remember both parties are just about as bad when it comes to distortion of the data.

- JanPaul

Related Posts:

• This is what provides a bullish indicator. Bernanke and his testimony in Congress.
• How about no recovery for a decade?
• The Federal Reserve is reported in several articles to have said in one of their meetings, “No net new jobs for 5 years.”
• This IS NOT an inventory recession, this IS a credit recession, LIKE 1930’s.
• The solutions have been provided but, nobody likes them because they cause a depression.

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