DENVER Guffaws erupted throughout the hearing room in the state Capitol basement when Democratic state Sen. John Morse talked about the government economy.
Morse was defending a ballot initiative to raise taxes for schools against Republican criticism that taxes would hurt the economy.
OK, what about the government economy, which is also part of the economy? Morse said, drawing snorts and laughs. I live in Colorado Springs, and when they talk about cutting defense spending, the whole town goes into a tizzy. And thats not private sector spending, thats government spending.
Rep. Jim Kerr, a Littleton Republican who was at the hearing, said he about fell out of my chair when Morse made his argument.
Every government job is a drain on the private sector because it takes money out of the economy, Kerr said in a later interview.
Taxes on private businesses pay for government jobs, he said.
Versions of Kerrs argument have become a common talking point for politicians from both parties, especially Republicans.
The fact is, government doesnt create jobs; otherwise, the last two-and-a-half years of stimulus would have worked, said Texas Gov. Rick Perry, a GOP presidential candidate, in an August speech.
Sustainable jobs are created by the private sector, Colorado Gov. John Hickenlooper, a Democrat, said in his first State of the State speech in January.
The debate on the merits of public or private jobs will only get hotter this year.
President Barack Obama was in Denver on Tuesday, proposing another round of aid to the states to avert teacher layoffs. And Colorado voters in November will decide on Proposition 103, a five-year tax hike to fund schools and colleges.
PAYCHECKS SPEND THE SAME
Some public employees are tired of the rhetoric.
Barb Rosten, an administrative assistant at Fort Lewis College, said her money is just as good at local businesses as cash from private workers.
People think state employees have cushy jobs with a great retirement package, said Rosten, who manages 10 budgets and three grants for various departments at Fort Lewis.
But most of the state workforce has not received a raise recently, and workers have had to contribute more of their take-home pay to their retirement as the state cut back.
I may not go to the grocery store as much as I used to, Rosten said. I may not go to the dry cleaners as much as I used to. Thats going to hurt our community.
Spending by both public and private workers benefits the economy, said Richard Wobbekind, a professor at the University of Colorado Leeds School of Business.
Unless youre going to tell me a banker spends their money more wisely than a teacher does, or a teacher spends more wisely than a real estate broker, thats a hard argument to make, Wobbekind said.
The government indeed is part of the economy 23 percent of it, Wobbekind said. Thats up a couple percentage points since the beginning of the recession.
As the private economy shrank, the federal government expanded, said Tino Sonora, an economics professor at Fort Lewis College.
Basically, the idea is to create demand and encourage firms to invest, Sonora said.
Sonora criticizes the first federal stimulus bill for not targeting the right kind of job creation. But some government jobs namely road-building and education can create long-run payoffs for the economy. Businesses can move their goods efficiently when the roads are better, and an educated population will make more money, Sonora said.
Wobbekind agreed on the value of roads and schools.
The debate, he said, is over when government should stop and the private sector should take over.
Should we really have swimming pools owned by the town? Wobbekind said.
RETIREMENT COSTS
Republicans also point out the cost of public employee retirement benefits.
State Treasurer Walker Stapleton a prominent critic of the state retirement system said he thinks public retirement plans cost more than the ones private workers use.
Stapleton recently visited North Dakota, which has the countrys lowest unemployment rate, thanks in part to rapid oil drilling and low regulations.
Stapleton thinks Colorado should follow North Dakotas lead and cut regulations in hopes of luring more fossil fuel jobs.
I dont think thats the same as creating a job in the public sector that is just growing government, Stapleton said.
PULLING BACK
But now, government is pulling back, especially at the local and state level.
Wobbekind prepares a yearly economics forecast that state leaders follow closely. Last winter, he predicted a first-ever decline in government employment local, state and federal in Colorado. He now thinks public-sector jobs are likely to remain flat this year.
Recent data are proving him right.
Colorados unemployment rate is stuck at 8.5 percent. In July, the private sector added 4,100 jobs, but the gain was partially offset by the loss of 900 government jobs.
In August, the trend reversed, with governments adding 500 jobs and private businesses shedding 2,300.
The state government had about 1,700 fewer full-time equivalent employees in 2010 than it did in 2009, according to the survey by the U.S. Census Bureau. Local governments shed 800 employees.
Almost any jobs would be welcome news for Sonora, the Fort Lewis economist. He forecasts that unemployment will remain around 7 percent to 8 percent for at least three years.
I hope Im wrong, but its hard to be optimistic these days, Sonora said.
Reach Joe Hanel at [email protected].
