By Ian Swanson - 03/04/11 05:29 PM EST
The White House has seized on the most positive jobs report in months to argue that GOP cuts to federal spending could stifle economic growth just as it appears the labor market is at last strengthening.
Unemployment fell to 8.9 percent in February, the first time it has dipped below 9 percent since April 2009, just a few months after President Obama took office.
Both parties hailed the report as good news, but congressional Democrats, the White House and their allies in labor cast it as a reason to stop the $61 billion in cuts to federal spending that House Republicans want to impose on the budget this year.
“We will continue to work with Congress to find ways to reduce spending, but not at the expense of derailing progress in the job market, making the investments we need to educate our workers, investing in science, and building the infrastructure our companies need to succeed,” Austan Goolsbee, the president’s chairman of the Council of Economic Advisers, said in a statement released shortly after the monthly labor report was released.
The White House on Thursday raised its offer on cuts to about $10.5 billion, leaving the two sides about $50 billion apart.
Senate Majority Whip Dick Durbin (D-Ill.) also criticized the Republican budget proposal after the labor report was issued. In a floor statement, he said he could not support the Republican bill because “it takes money out of key investments in our economy in a time when we need them the most.”
In their own statements on the report, Republicans framed the jobs news as a reason for more budget cuts. They also noted that stopgap spending legislation approved this week, which cuts $4 billion in spending while keeping the government running for two weeks, received support from a majority of Democrats.
“Hopefully this means they will join us in supporting further measures to fund our government responsibly and ensure that Washington begins to live within its means, but I remain concerned that their only proposals to date have been more status-quo, stimulus-style spending,” said House Majority Leader Eric Cantor (R-Va.).
He said the last election showed that voters believe “less government spending equals more private sector job effort” and promised that Republicans would keep up their effort.
Speaker John Boehner (R-Ohio) said the extension of the Bush-era tax rates at the end of December provided certainty for businesses that are now investing in the economy. “Now we must build on it by eliminating the job-crushing uncertainty being caused by excessive spending, borrowing and regulating in Washington,” he said.
Economists in the last week have raised questions about whether the GOP-proposed cuts could lead to job losses.
Mark Zandi, the chief economist for Moody's Analytics, suggested the GOP cuts could cost the economy as many as 700,000 jobs. Federal Reserve Chairman Ben Bernanke in testimony this week suggested that estimate is too high, but he did say the $61 billion in cuts could trim economic growth by a more modest amount.
Sen. Bob Casey (D-Pa.), the chairman of Congress’s Joint Economic Committee, said lawmakers should take the report by Zandi “very seriously.” While Congress must continue to cut spending, he said, Washington must also work to allow the economy to grow, he said.
“We have to reduce spending. That’s what we have been doing,” he said in an interview. “But as we're cutting, we've got to grow. And we can do both.”
“We've got lots of work to do and have to keep on track with job creation," he said.
The unemployment rate dropped to 8.9 percent in February from 9.1 percent in January and is down from 9.8 percent as recently as November.
While much of the drop comes from those who have left the workforce and have given up pursuit of a job, there is also increasing confidence that the economy is turning around.
The economy gained 152,000 jobs in December rather than the 121,000 previously estimated, according to Friday’s report, and 63,000 jobs in January rather than the 36,000 initially estimated.
Still, Richard Trumka, president of the AFL-CIO, said the recovery remains threatened “by irresponsible budget-cutting in Congress and in states and cities across the country.”
He noted that a weak spot in the economy remains the budget crises faced by states and local governments, which cut 30,000 jobs in February.
More than 1,000 county officials from across the country will be in Washington next week to meet with their lawmakers. Their argument, according to officials from the National Association of Counties, will be that to get the nation’s budget in order, Washington must do more than just reduce discretionary domestic spending, which they said represents a fraction of total federal spending.