In the discussion this evening in the Senate, Republican Senator Hollingsworth seemed to scoff at the lost jobs that would result from all the construction projects that would be stopped this week without a budget. He made his own jobs case, arguing about the jobs impact of a sales tax increase, in explaining his “no” vote on the budget and revenues. This is “not in a vacuum.”
Certainly not. These decisions are not in a vacuum. For every dollar that California does not raise in taxes, that’s a dollar in cuts to health, education, and other vital services. But let’s consider not the social but only the economic impact of such additional cuts–on top of the $19 billion in cuts already made, or the $15 billion of cuts in this deal.
In fact, cuts to health and other vital services would have more severe impact on jobs than equivalent changes in tax policy. Every dollar in health and other services goes to a Californian–not outsourced, not saved in an out-of-state bank–who will then spend it again in California. Especially when those services–like in education, health and human services–employ and/or serve low- and middle-income Californians, there’s a bigger “multiplier effect”, since those folks tend to spend those salaries and benefits immediately on the necessities of life, right back into the California economy.
Senator Cedillo was eloquent when he suggested that public sector worker shopping for groceries has the same economic impact as a private sector worker. Senator Steinberg made the point forcefully about the jobs impact of even additional cuts beyond the billions already in the package.
Health Access published a study last year that explored the economic impact of cuts, even in comparison to tax increases:
Here’s a section of a federal report on the jobs impact of the economic recovery package, that includes Appendix 1, which evaluates the different economic “multiplier” and jobs impact between services and tax changes:
The basis of the Obama economic recovery package is that there’s greater economic multiplier and jobs benefit in protecting services than in tax policy changes.
For Senator Hollingsworth, if there’s a real issue with jobs, the real long-term threat to jobs is the spending cap, which would prevent California from ever making the investments to help our economy. Those who are really concerned about jobs should vote against the spending cap, not against the revenues in the budget. A spending cap would force cuts in health care and other vital services, well into the future. With health care inflation and an aging population, a cap would simply force additional cuts to the health system we all rely on, and that is a significant part of our economy.