Where's the jobs?

Editorial, News and Observer, August 22, 2013.

After the 2013 session ended, state Sen. Neal Hunt sent his constituents a list of what he considers the accomplishments of the Republican-led legislature. One “to-do” item checked off by the Raleigh Republican was typical of the GOP’s claims:

“You expected us to create a competitive business climate to lower our unemployment rate and to put our citizens back into high-quality jobs; tax reform and regulatory reform will accomplish this.”

Yet the problem isn’t going away, and the Republican solution seems to be making it worse. North Carolina’s unemployment rate ticked upward in July, putting the state in a tie with Rhode Island for the third-highest level of joblessness at 8.9 percent.

Even as the state tries to spur private-sector hiring, it’s increasing unemployment – and cutting demand for goods and services – by squeezing the public sector with tax cuts that lead to budget cuts that lead to job cuts. Employers added 8,200 jobs last month, but that gain was offset by a loss of 5,300 public-sector jobs.

State policies can’t do much to stem broad, national economic trends, and the nation is caught in a slow recovery from the Great Recession. State policies can make a bad situation worse, and there are indications that state Republicans are actually doing harm.

Sen. Hunt uses the future tense in his claim, but after two and a half years of Republicans’ controlling the General Assembly, that “will happen” is changing into “when will it happen?”

Two years ago, Republican lawmakers refused to extend a temporary 1-cent sales tax despite a plea from Democratic Gov. Bev Perdue. Republicans said the money should be returned to taxpayers who would use it to boost the economy. The tax disappeared into its sunset, costing the state $1.2 billion annually. Two years later, unemployment is ticking upward, and North Carolina is nearing the top of the list for jobless rates.

This year the legislature further tightened the tap on spending even when the money was coming from the federal government. It rejected an expansion of Medicaid and, with it, an influx into the state economy of $601 million next fiscal year and more than $2 billion annually afterward.

It also said no to a federal extension of unemployment funds that would have pumped $20 million a week into the state economy through the end of this year. In the next few years, state spending will be further restricted to compensate for tax cuts passed this session that will reduce state revenue by $2.8 billion in the next five years.

The early results are not encouraging.