The Impact of Federal Spending on Ohio

Unemployment is soaring--nearing 10%. If this administration had a plan, and some think it does, to take over responsibilities and rights of both the states and the private sector, you could say it's working beautifully. The state's Unemployment Insurance fund is being drained. Ohio, like your state, then seeks federal help. But that comes with strings--ropes and chains that bind, then strangle. Total government expenditures relative to the private economy is called "the government expenditure wedge." The government expenditure wedge is determined by dividing government expenditures by net domestic business output. From the Buckeye Institute's May 2009 report:

"The historic relationship between the growth in the private economy, the size of the government expenditure wedge, and the change in the government expenditure wedge illustrates that increases in government spending relative to the size of the private sector causes a reduction in the overall growth of the economy.

For example, between 1965 and 1983, the government expenditure wedge grew quickly, rising 16.6 percentage points to 49.0%. Growth in the private sector slowed to 2.5% per year.

On the other hand, between 1983 and 1988, growth in the private sector accelerated to 5.1% per year as the government expenditure wedge fell 3.3 points back down to 45.7%.

Consequently, the costs of accepting federal dollars from the ARRA will be a long-term drain on the private sector. The ARRA [American Recovery and Reinvestment Act of 2009] will increase the government expenditure wedge from 49.16% to 52.41% for an overall 3.25% increase. This increase will reduce the growth in real net business output by 2.5%, which translates to a reduction of 1.7 million jobs nationally - of which between 66,400 and 91,200 jobs will be lost in Ohio."

That was May. I think the figure is higher now. So don't you believe that "jobs saved" line as the bullying federal government gives you a wedgie.