During a discussion of the latest jobs report, The Wall Street Journal's Stephen Moore ignored the prominent role sequestration cuts played in depressing job growth, choosing instead to make the reality-defying claim that sequestration has in fact been a boon to the economy.
On October 22, the Bureau of Labor Statistics released its monthly unemployment report for September. According to the report, payrolls rose by 148,000, while the unemployment rate dropped from 7.3 to 7.2 percent. Those positive gains, a welcome change from losses sustained after the financial crisis, nonetheless fell short of expectations that 180,000 to 200,000 jobs would be created in September.
WSJ's Moore reacted to the jobs report during an interview with Fox News host Jenna Lee on Happening Now. He claimed the numbers represented an economy in “stagnation” that is “middling at best” and “kind of limping forward.” Lee followed up, asking whether automatic spending cuts known as sequestration were to blame. Moore responded:
MOORE: Well first of all, I think the sequester has been very good for the economy, not bad. When you cut government spending, that frees up resources for private businesses. So the sequester has been, in my opinion, a very positive force and it's bringing down the deficit in spending.
Moore's cheerleading of sequestration while complaining about an under-performing economy is ironic because the slowdown of the recovery has been caused in large part by the sequester, which, according to Yahoo! Finance, is “finally dinging the economy”:
Forecasting firm MacroEconomic Advisers has lowered its second-quarter forecast for GDP growth from 1.8% to 1.3%. That's very weak growth that will probably hold back hiring and spending, and depress confidence. “The sequester is expected to slow growth this year, and largely accounts for the weak second-quarter growth and lackluster third-quarter growth,” the firm said in a recent report.
Pullbacks in the job market seem likely during the next few months. After five straight months of improvements, small businesses surveyed by the National Federation for Independent Business curtailed hiring in May. The latest jobs report from ADP showed private-sector firms created about 30,000 fewer jobs than expected in May, with companies hiring at a pace too slow to bring down the unemployment rate. Manufacturing activity, which is directly affected by federal spending on defense contractors, has fallen below the level generally considered to be recessionary.
Tony Nash of forecasting firm IHS warned recently on CNBC that the effects of the sequester should build as the year goes on. Even the Federal Reserve mentioned the sequester in its latest “beige book” report on regional economic conditions, citing concerns about defense-industry cutbacks in the Cleveland and Richmond regions.
According to the Oregon Office of Economic Analysis, the sequester has impacted job growth throughout the country. CNN recently confirmed an earlier report that the sequester has slowed economic growth. Worse still, an October 2013 report by the Bipartisan Policy Center found that the “full brunt of the [sequester] cuts hasn't hit yet, and if we go down the sequester path for too long, we won't be able to reverse the devastating impacts.”
Furthermore, repealing the sequester would stimulate the economy. According to an analysis by the non-partisan Congressional Budget Office (CBO), canceling sequestration would increase the United States' Gross Domestic Product (GDP) by $113 billion and generate 900,000 new jobs, which the Economic Policy Institute noted, is “a number akin to 40 percent of the total number of jobs created over the last twelve months.”
Moore's ignorance is not new. He previously claimed that sequestration was a “success” free of “negative consequences,” a sentiment echoed throughout the right wing media. Instead of spending cuts, Moore would do well to turn his attention to job creation.