President Obama’s top economic adviser, Alan Krueger, called for Congress to stimulate job creation among state and local governments in order to address the slowing growth of the economy.
Krueger attributed the weak economic growth to a lack of stimulus funding. “Since the Recovery Act funds have been phasing out, however, declining State and local government activity has subtracted from GDP,” the chairman of Obama’s Council of Economic Advisers wrote in today’s advance estimate of GDP for the second quarter of 2012.
Obama reflected a similar understanding of the economy last month. “The private sector is doing fine,” the president told reporters in June. “Where we’re seeing weaknesses in our economy have to do with state and local government — oftentimes, cuts initiated by governors or mayors who are not getting the kind of help that they have in the past from the federal government and who don’t have the same kind of flexibility as the federal government in dealing with fewer revenues coming in.”
In keeping with that analysis, Krueger today noted that “President Obama has proposed to Congress a plan that would help State and local governments retain and hire teachers and first responders.” He added that Obama’s plan would “assist the construction sector and economy of tomorrow by rebuilding and modernizing our Nation’s infrastructure, and would give small businesses tax cuts to encourage them to increase payroll.”