Is it a recession? Or is the economy “resetting”?

Yesterday, Microsoft announced its first major layoffs in the software company’s history. KUOW reported the hit to the economy is even greater than it sounds: Each Microsoft job supports, on average, three other local jobs.

But something CEO Steve Ballmer said relates to state government budget discussions: Microsoft, he said, is making cuts because they don’t see the economic downturn as a recession, they think the economy is resetting to a lower level of consumer spending.

It’s not just semantics: The difference is at the heart of the public budget-related disagreements between Republicans and Democrats here.

Republicans say state spending grew to an unsustainable level and should be reset to a lower level.

Democrats say we’re in a recession, the state’s economy will bounce back, and with that will come increased revenues from sales and property tax.

And that’s why Democrats have been open to using federal stimulus money to patch the $6 billion-and-growing budget hole, whereas Republicans say they don’t: One group thinks they’re building a bridge, the other thinks they’re lengthening the plank.

Tags: Budget, Democrats, economy, Republicans