That reduced the number of people actively looking for work, and that in large measure is why the unemployment rate has fallen.
As for the rash of administration-driven news stories that further state and local government payroll cuts will worsen the economy, consider these observations:
1. Government cannot be immune from budget and payroll cuts in a time of economic adversity. Indeed, beleagured taxpayers and businesses are the first to be forced to tighten their belts in a down economy while bearing the heavy tax burdens of government, which further weakens business and household budgets alike.
Government workers have been virtually immune from job losses in times of recessions, but that must change and, as we see in states across the country, is changing.
2. Payroll downsizing is part of the necessary correction to bring long-uncontrolled, debt-ridden state and local government spending practices in line with sharply reduced tax revenues. Lessen the tax burden on businesses and workers and you strengthen the private sector and hasten its recovery. That's not only good fiscal policy, but sound economics, too.
3. America has been through many recessions in its history but it has always come back stronger than ever. The worst was the Great Depression of the '30s, when the government's policy was to create temporary jobs until things got better. It took nearly a decade before the economy did begin to recover, but only as a result of World War II.
Obama has essentially followed the same policy by thinking that if he spent enough on "shovel-ready jobs" and other federal spending programs, he could quickly turn our $14 trillion economy around. Two years later, the economy is growing again (because of cost-cutting, profit-boosting decisions by businesses), but weakly, and jobs are still in short supply.
In the 1981-82 recession, when unemployment hit 10.8 percent, President Reagan cut taxes across the board for all income levels, and the economy took off. Monthly new-job numbers rose to 200,000, 300,000 or more, quarterly GDP rates grew by 4 to 5 percent, and Reagan won re-election in a landslide, carrying 49 states in 1984.
Flash forward to the Obama economy in January 2011: Nonfarm employment rose by a pathetic 36,000 jobs, and the minutes of last month's Federal Reserve policy meeting said board members expect high unemployment to continue through 2013.
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