Rep. Kevin McCabeBy REP. KEVIN MCCABE
Last Friday, Rep. Ky Holland stood up on the House floor to sound the alarm about the so-called “civic economy.” He warned that cutting federal jobs — like President Trump has promised — will cripple communities, tank the free market, and send us all into economic free fall.
Let’s look at that a bit. Alaskans don’t fall for scare tactics without evidence, and history tells us that a leaner government doesn’t kill the economy; in fact, it strengthens it.
First, let’s start with a definition. What is a “civic economy”? It’s not some new DC buzzword, it is not an economic term, and it is not one that economists or scholars use.
Generally speaking, it’s just people getting things done together — whether it’s a Kenai Peninsula co-op selling local beef or Big Lake neighbors pitching in to build a boat ramp. It’s regular folks, not bureaucrats, improving their communities without government handholding.
The free market? That’s the bigger animal in the discussion. It is not, as Holland suggested, subservient to a civic economy. The free market is supply, demand, competition, and the freedom to turn hard work into success. The civic economy is actually an ancillary part of that, not the thing keeping it alive.
The big fear of many people right now is that cutting federal jobs — maybe as many as 200,000 if Trump sticks to his past plans – will gut local projects and send the free market into a tailspin. The Democrats, liberals, and big-government independents claim federal workers and grants are the glue holding communities together.
Sorry, folks, history proves that’s nonsense. Let’s look at the cuts of a famous Democrat president in the 1990s.
Under President Bill Clinton, the government slashed over 377,000 federal civilian jobs — some estimates put it as high as 426,000. That’s 17-20% of the federal workforce. Most of those cuts came through buyouts, early retirements, or voluntary exits. In fact, only about 20,000 federal employees were forced out.
Did the economy crash? Hardly. The private sector actually boomed, adding 22.7 million jobs. Unemployment hit a 30-year low, GDP grew 35%, and we had four straight years of budget surpluses—the only ones since 1969. The national debt? It shrank from 47.8% of GDP in 1993 to 31.4% by 2001. Instead of collapsing, the free market thrived. America thrived!
Fast forward to today. The federal workforce is still sitting at 2.1 million civilians—a tiny fraction of the 155 million workers in America. A 10% cut (about 200,000 jobs) barely moves the needle in a $27 trillion economy. To put it in perspective, 20 million jobs were lost in a single month in 2020, and the economy still bounced back. I know it hurts some of our friends and family, and I understand the angst in a government town like Juneau or even a government state like Alaska, but if a real crisis like that didn’t destroy the free market, some federal job cuts won’t either.
And the civic economy isn’t dependent on federal paychecks. In 2023, US nonprofits pulled in $2.6 trillion, and only a third of that came from government funding—mostly at the state and local level, not DC. The rest came from private donations, local businesses, and good old-fashioned hard work. Co-ops and community projects don’t need a bureaucrat in Virginia to survive; they run on members, markets, and local initiative.
Clinton’s job cuts came alongside tax hikes on the wealthy and spending reductions in defense and welfare. The result? The economy grew, revenues climbed, and businesses thrived. The civic economy didn’t collapse—people adapted, just like they always do and America boomed.
I have heard some argue, “But what about federal grants? Won’t cutting them kill local projects?” Not likely. After 2008, when the feds tightened spending, private crowdfunding exploded. By 2012, crowdfunding had hit $1.6 billion—funding everything from community centers to small businesses. Less government doesn’t mean people give up; it means they step up. That’s freedom, not failure.
And let’s not forget that a smaller federal government actually strengthens the civic economy. Fewer regulations mean it’s easier to start a co-op, pool local funds, and launch new businesses. Less interference from Washington means communities lean on each other, not bureaucrats. That’s the Alaskan way. Less government equals more liberty. Why do progressives have such a hard time with that concept?
Rep. Holland and others can wring their hands and worry all they want; publishing lists of jobs lost, and offices affected, but the facts are clear – the civic economy isn’t held together by federal jobs, and the free market isn’t fragile. Trump’s reductions in force might shuffle some desks in Washington, or even in Alaska, but they won’t sink Main Street or Wall Street. If anything, they’ll open up more opportunity for innovation, local control, and private-sector growth. Clinton’s cuts trimmed government waste, fueled economic expansion, and even reduced the national debt. There’s no reason to believe history won’t repeat itself.
Change can make people nervous — I get that. But this country wasn’t built on government paychecks. It was built on self-reliance, hard work, and the drive to make things happen without Washington’s permission. That’s the Alaskan way, and it’s the American way too.
Rep. Kevin McCabe serves in the Alaska Legislature for Big Lake, District 30.