Many pundits have been telling us that the reason that workers are not getting jobs is that employers cannot find workers with the skills needed for the positions available. I have regularly ridiculed this position, since if it were true we would see sharply rising wages in some sectors as employers competed for the limited group of workers who have the necessary skills. Of course we don’t see any major sector of the labor market with rapidly rising wages.
However, I must now reconsider this view. David Brooks presented compelling evidence that employers cannot find workers with the necessary skills in his column today. In this column he criticizes Obama for attacking the budget proposed by Paul Ryan (and endorsed by the House Republicans and Governor Romney), which according to the Congressional Budget Office (CBO) would eliminate the federal government except for health care programs, Social Security, and defense by 2050.
Brooks focuses on the more near-term story. He tells readers:
“In 2013, according to Veronique de Rugy of George Mason University, the Ryan budget would be about 5 percent smaller than the Obama budget, and it would grow a percent or two more slowly each year. After 10 years, government would be smaller under Ryan, but, as Daniel Mitchell of the Cato Institute complains, it would still take up a larger share of national output than when Bill Clinton left office.”
Yeah in 2023 the budget will be larger than the last Clinton budget, what could Obama possibly be complaining about?
Okay, now if David Brooks knew arithmetic, he would be able to look at the CBO projections and see that in 2023, it projects that spending on items other than interest, health care spending, and Social Security is projected to be equal to 6.75 percent of GDP in 2023. He would also look back and see that this spending was equal to roughly 9.3 percent of spending in 2000.
Currently, military spending (excluding the war in Afghanistan) is approximately 4.0 percent of GDP. If Representative Ryan left military spending at this level, as he has suggested in his criticisms of President Obama’s proposed cuts, his 2023 budget would leave an amount equal to 2.75 percent of GDP for everything else. If he allowed the the defense budget to fall back to 3.0 percent of GDP, its 2000 level and also the low point for the last 60 years, he would leave 3.75 percent of GDP for everything else.
Since President Clinton’s 2000 budget alloted 6.3 percent of GDP for this everything else category (e.g. roads and bridges, education, medical research, the Justice Department and the federal prison system, and the national park system) the Ryan-Romney budget implies a cut of between 40 and 56 percent in most categories of government spending. If David Brooks knew arithmetic, he would realize that cuts of this magnitude are a big deal and that Obama is absolutely right to make a big issue of them.
Unfortunately, the NYT is unable to find columnists who know arithmetic. Therefore, they have to print David Brooks making silly assertions about the Ryan budget and President Obama’s criticisms of it.
Economist Dean Baker is co-founder of Center for Economic Policy and Research and writes regularly on CEPR’s Beat the Press blog, where this post first appeared.