Jobless Claims Continue To Fall Despite GOP’s Continued Attempts At Austerity

imagesA new report by the Department of Labor showed that jobless claims fell for the third week in a row, which came as a surprise to experts who believed those claims would climb from just under 347,000 to 350,000. Unemployment has also fallen to 7.7% in recent weeks, showing a strengthening job market despite uncertainty about the sequester and lawmakers’ intransigence when it comes to the federal budget and national debt. While there was also some shrinkage in the labor force as a whole, that shrinkage was due to retirement as well as people dropping out of the workforce.

If jobs continue to be added at February’s rate, then it’s possible that, by the end of 2013, the unemployment rate could fall below 7%. However, according to The New York Times, experts feel that the sequester and the ongoing political gridlock are likely to interfere with this in the coming months. Certainly, it won’t help.

The Times quoted the chief U.S. economist at IHS Global International, Nigel Gault, as saying, “They’re doing their best to get in the way. But the good news is that the economy is carrying plenty of momentum going into sequestration.” He goes on to explain that, without the sequester and the expiration of the payroll tax holiday, the economy might have begun to grow by as much as 3%, instead of the 1.5% he currently predicts.

Last summer, Nobel prize-winning economist Paul Krugman said that we already had the economic policy of the GOP’s dreams. He looked at government spending from federal all the way down to state and even local levels, and noted that such spending has been falling steadily since 2010, which was when the stimulus package ran out. He (quite correctly) pointed out that what our economy looked like at the time bore a remarkable resemblance to the “Great Mistake” of 1937, when the GOP convinced FDR that the government was spending way too much and they needed to cut back. That spending cut threw us right back into the depression we were struggling so hard to get out of.

Other economists also feel that spending cuts hurt economic recovery. Republicans are trumpeting austerity as the answer to our economic woes, and yet, in other countries—such as the U.K.—austerity resulted in a double-dip recession.

A post on the Economic Policy Institute’s website discusses where the blame should actually lie for the sequester and subsequent fallout. The GOP has consistently held the debt ceiling hostage, they’ve filibustered a Senate omnibus spending bill into nonexistence, and refused to consider anything that most economists agree would have helped strengthen the economy sooner. A single dollar of spending cuts can inflict more than four times the economic damage of a single dollar of additional revenue.

Contrary to what right-wing pundits and the GOP keep bleating, the President has come towards their side of things, willing to cut spending for certain social programs despite the Democratic Party’s loathing of such cuts, in exchange for closing tax loopholes. Speaker Boehner and others in the GOP will consider no deficit-reduction plan that has additional tax revenue, unless that revenue is specifically to pay for even more tax cuts for the wealthy.

Considering our recent growth in the jobs market, despite a tax increase and uncertainty about the sequester, it’ll be interesting to see what happens in March and April as furloughs go into effect for thousands of federal employees, not to mention effects in other areas will be felt as well. We’ll see soon just how well spending cuts without additional revenue works in a recovering economy.

Rika Christensen is an experienced writer and loves debating politics. Engage with her and see more of her work by following her on Facebook and Twitter, and check out her blog, They Need To Go.