Federal, state and local governments now employ 500,000 fewer workers than they did on the eve of the recession in 2007, the longest and deepest decline in total government employment since the aftermath of World War II.That's in marked contrast to how we recovered from recessions in the past, as the graph at the top shows. Meanwhile, inflation-adjusted federal, state, and local government consumption and investment has declined by 4.9 percent.
Total government spending continues to increase, but those broader figures include benefit programs like Social Security. Government purchases and investments expand the nation’s economy, just as private sector transactions do, while benefit programs move money from one group of people to another without directly expanding economic activity.
And with the sequester, we're heading for more cuts. Basically, the United States economy is in a hole and Republicans are yelling "dig faster." They'd probably bring in hole-digging equipment if they didn't worry that might create government jobs.