Looks like 300 million dollars are going to be cut from our schools and social services. That's just a start, apparently, we've got to get to $2 billion this fiscal year and $3billion in the next. But just to be clear, unless our schools have been burning $300 million dollars in a literal fire, that's going to increase our unemployment rates at a time we already have 9.6% unemployment. I think its clear that this makes it more likely not less that our economy will fall into a double dip.
Even if we can make these kinds of cuts without affecting school quality (which I seriously doubt), even if we are able to find people to fire who are making zero impact on our school quality, those people will be added to our unemployment roles. Those people will have to immediately cut spending, which impacts demand, which will reduce the incentive for businesses to hire and the cycle continues.
For those who think the government stimulus was a waste of money, now as that stimulus expires, we'll see what happens, to some extent, to our economy without it.
By the way, these spending cuts will be offset somewhat, by the Fed's decision to increase the money supply through its monetary policy, which conservatives inexplicably are also against. In that link, Krugman argues that even Friedman is too liberal for today's conservatives.
All of this is worrying enough, but I assume that $300 million (plus the additional cuts still to come) are sizeable enough that it will affect educational quality.
I just ran across this article recently. It is short, but the author tries to pinpoint the source of America's wealth. Here's how the article concludes:
"America does seem to be special in important ways, but it's not always clear what those ways are. A liberal economic order and geographically mobile population are important, but so is the level of education, the promise of social mobility, and the openness of America's borders. It's worth keeping all of that in mind as the country's leaders think about the ways economic policy should change in the wake of the Great Recession."
It's like Arizona read that paragraph and decided to do the opposite of every item in this sentence.