A safety net for government jobs?

Obama's stimulus plan may strive to prevent layoffs of public-sector workers in states, cities.

By , Staff writer

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    On Tuesday, President-elect Barack Obama spoke to reporters after a meeting with his top economic advisers at his transition office in Washington. This week, Mr. Obama called on Congress to create 3 million jobs over the next two years as part of an economic stimulus plan.
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In Washington this week, President-elect Obama called on Congress to create 3 million jobs over the next two years – “more than 80 percent of them in the private sector.”

Republicans on Capitol Hill did a little quick math: That means 20 percent, or some 600,000 new jobs, will be in the public sector. That would boost the ranks of federal employees by a third, they said, none too pleased about the prospect of a “big government” revival.

“The federal government is bloated, inefficient, and spends too much of your hard-earned money,” said Rep. Steve King (R) of Iowa, in a statement. Some 600,000 new government jobs “will only add to the waste, fraud, and abuse coming out of Washington, D.C., and fail to provide a true economic stimulus.”

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But that calculus leaves out a key phrase that Obama transition officials insist is part of the president-elect’s plan: to create “or save” 3 million jobs. “The vast majority of government jobs will be state and local jobs being saved,” said one official, speaking on background.

The debate over whether public- or private-sector jobs deserve a bigger backstop in a troubled economy is reviving one of the most enduring fault lines in American politics.

When President Franklin Roosevelt launched his Works Progress Administration in 1935, conservative critics called it a boondoggle. Many liberals, then and now, saw the program as transforming and as a big boost for the nation. By its demise in 1943, the WPA had employed some 8.5 million people and created roads, schools, bridges, and works of art across America.

But the jobs the Obama team aims to support in the public sector aren’t brand new federal jobs, aides say. They’re mainly existing state and local jobs, threatened by worsening state budget woes.

States are awash in red ink, with only a few exceptions, across the nation.

“Combined budget gaps for the remainder of this fiscal year and state fiscal years 2010 and 2011 are estimated to total more than $350 billion,” according to a Dec. 23 report by the Center on Budget and Policy Priorities.

Because most state governments cannot by law run a deficit, states have already begun drawing down available reserves or rainy day funds. What’s left are spending cuts, including potentially massive layoffs of state and local employees, or tax increases, the report notes. “Budget cuts are often more severe in the second year of a state fiscal crisis, after reserves have been largely depleted and thus are no longer an option for closing deficits.”

“Right now, there’s a grave risk that many, many state and local employees are going to be put out of a job because of budget cuts,” says Henry Aaron, a senior fellow at the Brookings Institution in Washington.

In that context, an Obama economic recovery plan that saves jobs that otherwise might be lost amounts to much the same thing as creating new jobs, he adds.

“If we can avoid job loss in the public sector as well as the private, that would be a major achievement,” he says. “It’s not clear [the Obama plan] would add to the baseline of public employment. It’s simply going to avoid job loss that otherwise might be.”

For public-service unions, which were among the strongest backers of the Obama and Democratic congressional candidates in the 2008 race, stakes couldn’t be higher. Thousands of members of the Service Employees International Union (SEIU) are contacting members of Congress this week to lobby for

“significant relief” to state and local governments to preserve “crucial services and good jobs.”

“In state after state, there are real issues about the number of workers they’re talking about laying off,” says Anna Burger, SEIU secretary-treasurer in a phone interview.

“In Michigan we heard yesterday that because they had to cut back on road crews, they won’t plow unless there are at least four inches of snow on the ground. In New York, there’s now a half-an-hour wait on a child-abuse hot line to get to workers, because of cuts. These are services critical for safety,” she adds. “We will be as active postelection as we were in the election … to make sure the newly elected members of Congress do the right thing.”

After meeting Monday with the president-elect and Democratic leaders in the Capitol, GOP leaders said they welcomed the inclusion of tax breaks in the Obama recovery plan but were wary of favoring public-sector job creation and unconditional grants to the states.

“I remain concerned about wasteful spending that might be attached to the tax relief,” said House Republican leader John Boehner in a statement after the meeting. “Simply put, we should not bury future generations under mountains of debt and create 600,000 new government jobs which, according to reports, the plan under consideration would do in the name of economic stimulus.”

Senate GOP leader Mitch McConnell said Republicans favor offering help to state and local governments as a loan: 5 percent interest over five years and then 9 percent after that.

“I think the states that did take advantage of the loans would be very careful about how they spent the money,” he said in a press briefing on Monday.

The high-profile role of public-employee unions in the lobbying over this bill is troubling for some Republicans, who see the unions as key players in GOP defeats in the 2008 election. They see a boost for public-sector jobs as a boost, too, for partisan unions.

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