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UPDATED: Think tank says 37,000 jobs to be lost from Virginia budget cuts

Rosalind Helderman

The Commonwealth Institute for Fiscal Analysis this morning released an analysis of the two-year budget adopted earlier by the General Assembly arguing that the budget will result in the loss of 37,000 public and private sector jobs.

The non-profit group, which generally favors progressive taxation and had advocated for a budget that would close the budget shortfall through some targeted tax increases instead of entirely through cuts, said they used a econometric modeling technique to judge state, local and private sector losses due to the drop in state funding in health and education.

Michael Cassidy, executive director of the group, noted 37,000 lost jobs would eclipse the 29,300 jobs Gov. Bob McDonnell (R) has said will be created through economic development spending the budget.

"To have the full picture, you have to put any of those gains against the losses that are quite real and quite substancial," he said.

He said the figure represents twice the number of jobs at Northrop Grumman's Newport News shipyard and the number of unemployed residents of Richmond, Virginia Beach, Danville, Arlington and Charolottesville combined.

Providing a think tank response from the other end of the political spectrum, Michael Thompson, chairman and president of the Thomas Jefferson Institute for Public Policy said tax increases would have led to more private sector job losses.

"Jobs are never lost when you leave more money in the private sector," he said.

UPDATE: Stacey Johnson, a spokesman for Gov. Bob McDonnell, responds: "The Governor knows that raising taxes on Virginians in tough economic times is bad fiscal policy. Richmond cannot attempt to balance its budget by making it harder for families and business to balance their own. The Governor's work to cut spending, not raise taxes, while investing in job-creating policies, will ensure that Virginia is well-positioned to create jobs and grow the economy in the years ahead. The Governor is focused on implementing the right policies in Richmond to spur job creation all across the Commonwealth."

By Rosalind Helderman  |  March 24, 2010; 11:29 AM ET
Categories:  General Assembly 2010 , House of Delegates , Robert F. McDonnell , Rosalind Helderman , State Senate  
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"Jobs are never lost when you leave more money in the private sector," he said.

What a joke. "Business is more efficient than government." Doesn't that mean the business employs less people to do the same amount of work than the government would.

Explain how "Jobs are never lost when you leave more money in the private sector" to the 200 Northrop Employees laid off last week, even though the CEO made $21M last year.

Posted by: JoeMck | March 24, 2010 1:59 PM | Report abuse

"Explain how 'Jobs are never lost when you leave more money in the private sector' to the 200 Northrop Employees laid off last week, even though the CEO made $21M last year."

Did the CEO bury that money in the backyard? He probably spent it on cars, yachts, house maids, houses, education for his kids, etc. All expenses that create jobs that create opportunity for those employees. Any money he put in the bank was loaned out to other people buying cars, houses, starting small businesses, etc.

Posted by: millionea7 | March 24, 2010 2:20 PM | Report abuse

Good, get rid of some government jobs. Those workers are lazy and overpaid. They should fire more.

Posted by: melador | March 24, 2010 3:23 PM | Report abuse

I work in the public sector. If I lose my job, I am unable to buy a new car, send my children to day care, pay someone to clean my home, go on vacation, buy new clothes, etc. Why is the CEO more valuable than me? Why is his yacht more important than my child's bicycle?

It seems to me that cutting jobs in the public sector costs jobs in the private sector, too. Please explain

Posted by: kkbrown | March 24, 2010 4:12 PM | Report abuse

Mr. Thompson is incorrect. In the absence of sufficient demand, businesses will save any tax cuts instead of using them for expansion - leading to job losses.

Posted by: weiwentg | March 24, 2010 4:25 PM | Report abuse

Mr. Thompson is correct in my opinion. Can we tax ourselves out of a recession as the Commonwealth Institute proposes? I believe not. Are some government jobs being cut in the Virginia budget? Yes. But would higher taxes that preserve those jobs do so without dampening the economy and causing a job loss in the private sector? I doubt it. What are the CI data, formula, modeling system?

Posted by: ShortPumpShorty | March 24, 2010 7:25 PM | Report abuse

In its report, CIFA notes that it's analysis is based entirely on former Gov. Kaine's introduced budget, not the budget passed by the General Assembly. How exactly is this news? Kaine's budget was released in December. The General Assembly made plenty of changes.

Posted by: ChrisMarston | March 24, 2010 8:17 PM | Report abuse

My comment in this article dealt with the difference between taxing and not taxing the private sector and which government approach impacts jobs more negatively. Taxes destroy jobs in the private sector which is simply true. There is an 8-10% turnover in state employment every year so lessening the burden of government can be handled without a lot of forced layoffs. Let's restructure government at the state and local level, prioritize spending, and run the operation more efficiently. The history of tax cuts and tax increases make it clear that tax increases hurt the private sector which is the only place from which government gets its money.

Mike Thompson, Thomas Jefferson Institute

Posted by: mikethompson1 | March 24, 2010 9:05 PM | Report abuse

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