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Tuesday, May 25, 2010

Private Pay Hits Record Low- Government Income To New Highs

"People are paid for being rather than for producing" - Economist David Henderson, Hoover Institution

USA Today reports that private pay has hit record historic lows while money obtained from government benefits or wages has expanded at what economist Donald Grimes from University of Michigan calls "not sustainable".

Key shifts in income this year:

• Private wages. A record-low 41.9% of the nation's personal income came from private wages and salaries in the first quarter, down from 44.6% when the recession began in December 2007.

•Government benefits. Individuals got 17.9% of their income from government programs in the first quarter, up from 14.2% when the recession started. Programs for the elderly, the poor and the unemployed all grew in cost and importance. An additional 9.8% of personal income was paid as wages to government employees.

Confirming his statement, Economist Veronique de Rugy of the free-market Mercatus Center at George Mason University, points to the riots in Greece as proof of this type of trends unsustainable outcome.

Greece should be an example to our political leaders about welfare states and what happens when this type of trend continues and Washington is not heeding that example as they continue to spend, spend and spend more.

Reminder from yesterday, Wapo:

Still, House leaders view the spending package scheduled to reach the floor Tuesday as must-pass legislation, saying it would shore up support among key constituencies heading into the November elections. In addition to renewing a laundry list of popular tax credits and deductions, the measure would extend unemployment benefits through the rest of this year and set aside $24 billion to help states close huge budget gaps without layoffs or new taxes. The package would also direct nearly $6 billion to finance summer jobs and settle discrimination lawsuits against the Agriculture Department -- both are top priorities among black lawmakers.

Congressional budget analysts have yet to calculate the price of the package, but senior Democratic aides said it could approach $200 billion, most of it unpaid for by new revenue. Among the big-ticket items is a proposal to postpone until 2014 a scheduled pay cut for doctors who see Medicare patients. While many members favor the delay, its $65 billion cost is causing heartburn in both parties.

Emphasis mine.

The Obama admin, Congress and the Senate are out of control with their spending and government interference and government entitlement programs, and there are people, like myself, that believe we are not "entitled" to what we have not earned.

The Democratically controlled Senate and Congress as well as the White House, seem to think that by virtue of being able to produce, create and earn, means the rich's wallets can be Washington's own little piggy bank, so they create these entitlement programs, hike the taxes on the rich even more, and the difference in what they collect from what they spend they simply ignore.

Government entitlement programs, such as food stamps, welfare, etc... should be stepping stones to help people who have fallen hard on rough times, to get them back on their feet, they should not be the way of life for people.

I leave Social Security out of that equation because the elderly has worked, had money taken from every check to be paid out upon retirement, so I do not consider that as an "entitlement" program.

No government can afford to pay people for "being" rather than producing and Greece is the perfect example of this and the political class needs to learn from the lesson Greece is teaching us and stop spending money we do not have.

[Update] It is not only Greece that is showing us what the end of the road will look like should we continue along the same path Obama has now put us on toward socialism.

Spain, Portugal and Italy, just to name a few more problem areas.

To top it all off now, Democrats are going to propose another $165 billion bailout for unions.