From the Department of Huh? Republicans continue to say no more money should be spent on schools and local governments

A curious thing has been happening in the Republican party recently. On the federal level and, at least here in Ohio, leading Republicans have become totally obsessed with government spending and its relationship to deficits and government growth. There seems to be two types of arguments that Republicans are trying to make here. (1) On the federal level, Republicans argue that the absolute most pressing issue right now is the amount of debt that the US government has taken on and the projected deficits in the short to medium future. (2) Here in Ohio Governor, Kasich strongly believes that any increase in spending by the state is an expansion of government and should not be considered. Of course, here in Ohio, due to constitutional requirements, the state is unable to operate with a deficit so Kasich doesn’t really have to worry about deficits in the future and how to address them.

This website is not in the business really of the federal budget process so I won’t go into it too much but to expand on the point I made above, Republican leaders in the House have made it clear that they want to see deep cuts in discretionary spending to help fight future increases in federal debt.  The theory being that if we do not address future debt concerns more federal dollars will be spent each year paying off the debt and this could have a negative impact on our ability to borrow money in the short to medium future. Now, without going into how plans put forth my Congressional Republicans have been shown to increase the national debt over the next 1o years but they do nothing to address the much larger problem, unemployment.  In lieu of the job numbers that were released today, below is a graph that shows the clear difference between reality and the world that Republicans think we live in. (via the Center on Budget and Policy Priorities)

As you can see, if the markets were actually concerned about the US’s ability to meet their obligations in the future they have a funny way of showing it. Don’t get me wrong, finding ways to solve our debt issue is a very important thing but right now that conversation is coming at the wrong time. You know what will help solve our coming debt problem, stopping unemployment from hovering around 9%.

So what exactly does this have to do with Ohio.  A couple things, first, there was a quote this week from Governor Kasich regarding the increase in spending in the Senate version’s of the budget and how he would not except any further spending in future budget negotiations.

Gov. John Kasich said the Senate’s version of the two-year budget shares his overall vision, but he warned that he soon will grow cold to additional spending.

“We are watching spending very carefully,” Kasich said. “We cannot put ourselves back in the hole by spending too much. There can be some give, but if there’s much more, we’re going to have a problem with it.”

For a Governor who has named his budget the “Jobs Budget” this is a very odd thing to say. For starters, that extra spending he is talking about has a direct correlation to creating jobs or keeping people in jobs that currently exist but wouldn’t if their is a reduction of state aid. With out those funds localities and school districts are going to be forced to either layoff employees or not hire more staff. The exact opposite from what a Jobs Budget should accomplish.

Second, what exactly is the concern here regarding spending on the state level? There isn’t a correlation between the amount of state spending and the ability of a state to grow or borrow money. State’s economies that are in a funk are not in a funk because of the amount of money that they spent, but because we are in a national recession that is causing every state to suffer. State’s also don’t seem to be having a harder time borrowing money now than they did four years ago. In fact, when Kasich went to Wall St. earlier this year to try and get a better credit rating from the rating agencies Ohio got the same rating as it had under Strickland.

Lastly, there was this comment from Kasich’s spokesman this week regarding Sen. Grendell’s attempt to simply get the fair value of the liquor profits before Kasich leases them to JobsOhio.

Nichols also responded in an e-mail that creating jobs was more important than expanding government.

“For those who really understand that job creation is Ohio’s greatest need right now, then the right focus is on making sure JobsOhio has every resource it needs to help create jobs and revive Ohio’s economy,” he wrote. “Ensuring a fair transaction on the liquor enterprise is a given, but a preoccupation with that to the detriment of JobsOhio’s success is just another example of people failing to realize that creating jobs is more important than growing government.”

This comment is a perfect example of what is wrong with the current administration’s understanding of job creation and government spending. We all agree that job creation needs to be the number one issue right, except if you are in Congress and you are a Republican. What we differ on is how to go about. Kasich believes that any dollar spent by the state is an expansion of government but what if at this time the economy needs and expansion of government to help us get through the bottom of this recession? This isn’t rocket science, families are spending less and less of their discretionary income on goods and services and more and more of it on paying down debt. When that happens demand falls for goods, business either stop hiring or lay people off and you see a spike in unemployment. The government doesn’t have that problem. When Ohio sends money to local governments and school district to hire teachers and public safety workers those are real jobs that help to add value to the economy. I just don’t understand how clear this is and how the Kasich administration continues down a path that is clearly the opposite of what they should be doing.

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