In coverage of the budget negotiations in Washington, which have largely revolved around how much money will be cut from the federal budget, it’s rarely acknowledged that the standard economic assumption is that reducing government spending at a time of diminished economic activity will destroy jobs. As a rule of thumb, every $1 billion in spending cuts eliminates roughly 10,000 jobs. (The Economic Policy Institute provides a slightly more sophisticated explanation here.)
Given the the public consistently tells pollsters that job creation should be the country’s top priority–often picked over deficit reduction by wide margins–this information should be included in every article on the budget debate. Thus when the New York Times (4/8/11) says that the Obama administration has agreed to $34.5 billion in cuts, and House Speaker John Boehner is pushing for $39 billion, the paper should note that the administration’s position would cost approximately 345,000 jobs, while Boehner’s would reduce employment by about 390,000.
I suspect that the inclusion of this information would rapidly change the debate.