The economy seems to finally be turning the corner. A few more months of solid gains, and rising consumer confidence will help boost demand, creating a virtuous circle that will restore solid growth. I can’t help but marvel, though, at how the recovery was held back — and could still be subverted — by government austerity measures.

The chart below (via Jared Bernstein) shows that while the stimulus in 2009 did a lot to boost the economy, the net effect of government policy since the stimulus has been to hold us back. That’s because as the private sector has gained jobs, government has consistently shed them.

Last week, Paul Krugman showed that without local government cuts, we’d have 1 to 3 million more people employed right now. Because of austerity measures, though, the public sector is dragging the economy down. That’s what a misplaced focus on the deficit gets you — a longer recession, and ironically, later deficits as a result.