Sen. Richard Shelby (R) of Alabama was on ABC yesterday, offering this summary of his approach to economic policy: “I believe that stimulus basically doesn’t work for the most part. We’ve tried that. The market grows the economy. We’ve grown the government, but we haven’t grown the economy.”
It’s worth realizing the extent to which Shelby is wrong about everything. Jonathan Cohn explains how Shelby’s take is the opposite of reality.
Just the opposite is true. According to the very best evidence we have, the Recovery Act prevented the economic downturn from becoming a full-brown depression or something very close to it. And private sector employment has been growing, albeit in fits and starts. The primary reason employment overall isn’t growing faster is that public sector workforces are shrinking, because low tax revenues are forcing local and state governments to balance their budgets with spending cuts.
If the federal government, which has the ability to borrow money, had simply maintained the assistance it provided after the Recovery Act expired, many more people would have jobs. And what would have worked a few months ago would still work today: Extending new assistance to the states would boost employment, by (among other things) keeping teachers, first responders, and plenty of other government workers from losing their positions.
Right. Shelby says we’ve “grown the government, but we haven’t grown the economy.” In Grown-Up Land, we have grown the economy, but we haven’t grown the government. This really is that complicated.
But let’s also note for context that Richard Shelby isn’t just some random television personality. He’s the ranking member of the Senate Banking Committee; he recently killed an important nomination to the Federal Reserve’s Board of Governors; he’s trying to kill accountability and safeguards for Wall Street; and last year, he held several nominees for key military posts hostage until he was paid off in pork for his state.
If Americans want to know why Washington isn’t doing more to create jobs, look no further than the confused senior senator from the state of Alabama.