Jobs Fallout

   How many jobs will drown in the wave of government budget cuts?
   The State Department and the Environmental Protection Agency (EPA) each face reductions of nearly one-third of their annual budgets. Other agencies will not be hit as hard, but the fallout from budget cuts will spread from government employment rosters to consumer and business entities that government agencies serve.
   Economics 101 specifies three main elements in any economy -- consumer consumption, government spending and business investment. In addition, there is the value of net exports -- that is, the total value of exported goods, minus the value of imports, since they are not produced in the home country.
   The idea is to measure the total value of all goods and services produced in any economic entity during a given period of time. This is called Gross Domestic Product, and is expressed in the formula C + G + I + (Ex-Im).
   Clearly, when one element takes a hit, the rest react accordingly and the result can be an overall recession throughout the entire economy.
   Conversely, when one part of an economy surges, the benefits spread to others. That's why government intervenes during economic downturns, to counterbalance any drop in consumer or business investment activity by sponsoring public works projects that put people back to work, paying wages that enable them to buy food, clothing and shelter, in turn boosting business activity, which in turn increases government tax revenue and everybody benefits.
   Without government intervention, a downward spiral worsens and an economic downturn becomes a full-blown recession or depression.
   In short, that's the theory behind government spending in the 1930s, which rescued the nation from the Great Depression. The same theory has been in play in subsequent downturns.
   But while deficit spending can be a disaster for a household or a business, it's less of an issue for government. Why? Because, in effect, the economic bottom line is that government debt -- read, taxpayer debt -- is owed to taxpayers themselves. Put another way, government sells bonds to raise funds for its projects, and buyers of the bonds are typically citizens of that same government, who are financing the projects that put other citizens to work, providing wages that go to purchases of products made by businesses, both of whom pay taxes that reimburse the government which is then able to redeem the bonds that stimulated the economic rescue plan in the first place.
   Then, when the economy returns to health, government can trim its make-work projects, reduce its debt and redeem the bonds.
   So government is an important player in guaranteeing overall economic health, injecting money to stimulate activity when other elements of the economy -- consumption and investment -- don't do enough.
   The tricky thing, however, is not to overdo in either circumstance. The U.S. economy has been doing reasonably well for the past several years, with the help of government spending while the private sector regains its footing.
   Now, however, instead of easing back slowly, the federal budget for the coming fiscal year proposes massive cuts in federal spending, the elimination of many programs in numerous areas, the cutoff of government funds for things like education, health and welfare, as well as research and development, plus wide trimming of the government workforce.
   All of which will mean lost jobs throughout government as well as the private sector that benefits from government aid.
   Instead of stimulating economic health by providing jobs and funding for government as well as private sector workers, the federal government is, in effect, about to trip up the national economy and send it into an economic recession.
   Unless, of course, the $54 billion additional funding for the military will entice many out-of-work Americans to enlist, because that's where the jobs will be.
   Perhaps we'll see a recruiting office on Sesame Street, since the Corporation for Public Broadcasting, having lost federal funding, will rent office space to some military contractors.