Everyone knows that the United States government spends far more than it takes in. Indeed, it has been doing that for all but a few years since 1930. Since it has been doing that pretty much all along, why get all that bothered about it at this late date? It would appear that the furor is being caused by the mounting size of this deficit spending in recent years under both political parties. At some point we might reach a point where the government is in so far in over its financial head that it is bankrupt in all but name but there is no bankrupcy court to appeal to. The question is then: are we there yet? Believe it or not, the answer to that question is neatly compiled in one table provided by that very same government via the Bureau of Economic Analysis in the Commerce Department. That table, number 2.6, is entitled Personal Income and its Disposition, Monthly. That one table gives you all the figures you need to assess where the government is at financially in relation to the people of this country. We have pulled out the critical parts of the data in table 2.6 into the table below. Please do not be deterred by the size of this table and all those numbers. Anyone with an eighth grade education can easily understand what this table tells us and how important it is that everyone understand the implications of what it shows. The critical part you need to digest is provided by the last two columns in the table. The column marked PRIV CAP shows how much money is made by private individuals in this country divided by our population to provide the per capita private earnings. When this figure increases, the average American is better off and when it decreases, we are worse off. The last column shows the the net financial effect that the government has on us because it is the total money coming in from private individuals and going out to them divided by our population. When the figure is negative, every man, woman and child is providing the government the figure shown each year to run the government. Obviously it should never be a positive figure because that would mean we are not providing any money to run the government but rather instead it is borrowing money to send money to us on top of the expense of running the government. Except for those last two columns, the other columns with money figures are in billions of dollars. The problem with the figures in the government table is that they are not adjusted for inflation, but there are figures at the bottom of the table to allow one to do that. We have done that for you in our table. The reason that it is critical to do that is because there is no way to tell if the government or we the people are better off or worse off than previously without making that adjustment. If you get a $5 a week raise but you are spending more than $5 a week more for groceries and gasoline than you were previously, then you are actually worse off in spite of the raise you got. Using the ratio of current dollars to 2005 dollars allows us to adjust all of the other figures in table 2.6 to 2005 dollars so we are not comparing apples to oranges. The population figures in the last line of table 2.6 allow us to calculate any figure to a per capita amount so we can see whether the average American is better off or not compared to a previous time. Indeed, we can do that for the government itself as well to see how much we are receiving from the government in benefits and paying to it in taxes and contributions to things like Social Security and Medicare. In line 1 of table 2.6 is the combined total income of all of us as individuals in billions of dollars on a month by month basis and that is in the column marked PERS INC in our table adjusted to 2005 dollars. Part of our income is from the government itself in the form of social security, medicare, unemployment benefits, etc. This amount is provided on line 14 in table 2.6 and is in the column marked TRANS, That is because the government calls the direct benefits it provides to us current personal transfer receipts. The amount we contribute to entitlement programs is found on line 20 in table 2.6 and is shown in the column marked CONTR. Likewise, line 21 gives the total amount we pay in taxes and is in the column marked TAXES in our table. The next column is a figure not provided directly by table 2.6 but is calculated by subtracting the transfers and adding back in our contributions to government benefit programs. We call this PRIV INC since this represents what our total income would be without the government having these benefit programs. We would not be receiving things like social security or Medicare nor contributing to them either. The next column gives us a figure of what effect the government has on us because it is the transfers to us minus the contributions and taxes we pay. Since it costs money to run the government, part of our income should go to the government to keep it going and hence be a negative figure to our own income. We might add that the sum of the private income per capita and the net government action is the total per capita income in 2005 dollars and it should and does agree with the figure provided in line 32 of table 2.6 plus or minus some minor rounding of amounts. Two things immediately jump out at you from this table. One is that the government benefits (transfers) are way more than our contributions to these programs and as you go down the table towards the more recent months, you will see that it is getting progressively worse. That in a nutshell is why social security is going broke. You will notice that the contributions suddenly drop quite a bit starting in 2011. That is because the two political parties decided to "forgive" part of the social security receipts for all of 2011. Hardly a peep was heard in opposition to this idea but it does mean that social security will go broke that much sooner. The second conclusion is the most startling and most unbelievable fact from our table found in that last column. At the top of the table back in 2005 through 2007, every one of us, including children, was ponying up between $1,855 and $2,340 to run the government and pay for all those entitlement program benefits some of us get. Suddenly that figure crashes in the middle of 2008 to less than half of that figure in June of 2008. By the first of 2009, this figure is down to $666 apiece. By April, it is down to pocket change. Starting in May of 2009, the figure goes positive and has been that way ever since. In the last two years, the average American has effectively not contributed one dime to run the government or pay for those entitlement programs. On the contrary, the government is sending some of us a lot of money because it is averages out to as much as $513 on an annualized basis for every last man, woman and child in the United States. How can this be you ask? Taxes have not actually been lowered because all they did was extend the Bush tax cuts already in place last December. Remember all of those give away programs where the government actually sent most of us a check? How about cash for clunkers and the first time homebuyer's credits at $8,000 per pop? Of course, programs like unemployment benefits and food stamps are running up the costs of all of those benefit programs just as tax collections are dropping due to an economy in the toilet as well. So how well did all those programs handing out goodies to some of us, but not all of us, work? Look at the private income per capita column to find out. That figure peaked at $35,113 in December of 2007. It dropped steadily down until it bottomed out at $32,342 in March of 2010. At the peak, we were sending the government $2,263 apiece per year and managing quite well. At the bottom, the government was sending each of us $421 on the average every year. In other words, our own average private income dropped from $35,113 to $32,342 for a loss of $2,771. The government went from taking in $2,263 to putting out $421 for a total turnaround of $2,684 in loss of income and outlays per person. The government attempted to make up for the loss of income by sending back all of the money we sent it and a whole bunch more. While that is no way to run a railroad, let alone a government, one can argue that the economic conditions justified these emergency measures. However, private income per capita has been increasing for over a year now but the government is still pouring out $485 in borrowed money to each of us on the average. The private income per capita has increased to $32,891 for a gain of $549. At the very least, the government needs to stop sending us money and start collecting some once again. We can begin by repealing the "forgiving" of part of the withholding taxes. The table shows us that contributions have dropped from $911 billion to $823 billion while the private income has actually started falling again from $32,925 to $32,891 during the same time. Clearly, this is not stimulating anything. We also need to repeal all of the special benefit programs added to "help" the struggling economy. The money is not being spread anywhere near equally. Car buyers and home buyers got huge special benefits and the rest of us got zilch. Not only that but when these programs stopped, they dried up both markets for months as the potential pool of buyers was dried up as all of those who could buy, did so while the getting was good. When is the government ever going to learn that it is doing more harm than good and by the time it gets around to applying a band-aid, the wound is already starting to heal?
YEAR MON PERS INC TRANS CONTR TAXES PRIVATE GOVT PRIV CAP GOVT CAP 2005 03 10,365.9 1,503.21 869.62 1,181.77 9,732.3 -548.18 32,947.6 -1,855.79 2005 06 10,509.8 1,516.11 873.61 1,209.95 9,867.3 -567.45 33,328.6 -1,916.66 2005 09 10,490.3 1,506.95 869.64 1,217.00 9,852.9 -579.69 33,192.9 -1,952.87 2005 12 10,660.2 1,510.10 875.62 1,248.31 10,025.7 -613.83 33,695.4 -2,063.02 2006 03 10,878.3 1,546.08 901.62 1,306.47 10,233.8 -662.01 34,322.1 -2,220.24 2006 06 10,954.9 1,570.41 861.69 1,306.84 10,276.1 -628.12 34,383.7 -2,101.67 2006 09 11,021.9 1,572.42 893.46 1,320.06 10,342.9 -641.10 34,511.5 -2,139.17 2006 12 11,187.5 1,596.22 907.33 1,366.01 10,498.6 -677.12 34,942.1 -2,253.63 2007 03 11,251.0 1,628.63 912.33 1405.68 10,534.7 -689.38 34,982.9 -2,289.24 2007 06 11,263.8 1,612.61 907.13 1,411.90 10,558.3 -706.42 34,976.2 -2,340.13 2007 09 11,331.5 1,634.35 907.22 1,417.51 10,604.4 -690.38 35,035.4 -2,280.91 2007 12 11,392.1 1,650.32 911.48 1,425.68 10,653.3 -686.84 35,113.3 -2,263.83 2008 03 11,401.1 1,668.54 915.28 1,424.71 10,647.8 -671.45 35,024.3 -2,208.62 2008 06 11,404.9 1,806.52 899.98 1,221.43 10,498.4 -314.89 34,457.3 -1,033.52 2008 09 11,293.3 1,716.60 897.11 1,343.54 10,473.8 -524.05 34,292.0 -1,715.77 2008 12 11,354.0 1,797.74 901.17 1,311.79 10,457.8 -415.52 34,163.9 -1,357.43 2009 01 11,247.1 1,846.59 896.42 1,254.20 10,297.0 -204.03 33,616.7 -666.10 2009 02 11,136.1 1,861.25 887.82 1,121.66 10,162.7 -148.23 33,157.6 -483.62 2009 03 11,119.8 1,898.35 886.91 1,085.82 10,108.3 -74.38 32,959.7 -242.52 2009 04 11,160.2 1,917.88 892.77 1,033.30 10,135.1 -8.19 33,025.6 -26.68 2009 05 11,330.2 2,075.84 896.05 1,022.13 10,150.4 157.66 33,053.0 513.39 2009 06 11,156.2 1,962.14 889.91 1,011.73 10,083.9 60.50 32,812.1 196.86 2009 07 11,111.7 1,956.83 886.49 1,017.29 10,041.3 53.05 32,648.1 172.48 2009 08 11,102.2 1969.22 886.61 1,021.77 10,019.6 60.84 32,550.6 197.65 2009 09 11,083.1 1,984.44 883.75 1,018.45 9,982.4 82.24 32,403.3 266.95 2009 10 11,060.6 1,969.50 883.21 1,014.54 9,974.3 71.75 32,352.2 232.72 2009 11 11,089.8 1,980.72 884.46 1,012.97 9,993.5 83.29 32,391.1 269.96 2009 12 11,128.5 1,999.85 882.81 1,010.37 10,011.5 106.67 32,427.6 345.50 2010 01 11,121.7 2,011.21 890.95 1,022.53 10,001.4 97.73 32,374.4 316.34 2010 02 11,129.1 2,017.32 890.08 1,022.59 10,001.9 104.65 32,356.1 338.54 2010 03 11,158.6 2,045.74 891.01 1,024.40 10,003.8 130.33 32,342.2 421.35 2010 04 11,242.3 2,053.22 899.13 1,030.21 10,088.2 123.88 32,594.2 400.24 2010 05 11,301.2 2,060.81 905.24 1,038.61 10,145.6 116.96 32,757.7 377.63 2010 06 11,321.6 2,070.92 906.35 1,040.06 10,157.0 124.51 32,770.2 401.71 2010 07 11,318.4 2,068.51 908.08 1,055.07 10,158.0 105.36 32,748.2 339.66 2010 08 11,351.7 2,098.86 909.73 1,060.81 10,162.6 128.32 32,736.1 413.35 2010 09 11,341.5 2,087.58 910.02 1,065.68 10,163.9 111.88 32,713.9 360.10 2010 10 11,379.7 2,091.47 912.60 1,076.83 10,200.9 102.04 32,807.9 328.17 2010 11 11,403.6 2,097.62 911.96 1,079.75 10,217.9 105.91 32,839.3 340.18 2010 12 11,428.5 2,096.45 911.62 1,083.64 10,243.7 101.19 32,901.3 325.00 2011 01 11,520.9 2,088.64 824.68 1,127.99 10,257.0 135.97 32,925.5 436.47 2011 02 11,520.9 2,085.60 824.24 1,126.57 10,259.6 134.79 32,915.3 432.44 2011 03 11,534.0 2,099.08 823.32 1,124.26 10258.2 151.50 32,891.2 485.75
How Much Economic Trouble is the U. S. In?
Here is How Taxing the Rich Works
The idea here is that the rich have more money than they know what to do with so why not raise taxes on them so the government will have more money to spend on programs to help people who struggling to survive? You need to know how the rich live and what they do with their money so you can see how this works. Believe us when we tell you that the rich do not hide much of their money in a wall safe in their master bedroom. They have three choices of what to do with their money. They can spend it, put in a bank and let it collect interest or they can invest it and hope to get a good return on their investment.
If they spend it that means they have had to pay for the goods or services they bought and they have to pay sales taxes on what they bought. Whichever company supplied the good or service along with their employees then gets the money. All that does is make whoever runs that company richer after he pays his employees. The rich could put their money in a bank so the bank would have money to loan to people but then banks only loan to people who have excellent credit and that sure does not include us who are struggling to survive. Even if they will lend to us, their interest rate is so high we can never pay the bank off so who needs this total ripoff anyway?
The third thing they can do is invest their money and get even richer by demanding control over whomever they are are willing to provide their money. Even though some of that money will be used to build new buildings and machines and another company has to supply the materials and labor to build the buildings and make the machines, only a small part of that money will go to pay their employees. The people running the construction companies and manufacturing companies will keep most of the money and get even richer. What little trickles down to us from those companies in the form of wages does not begin to make up for the huge profits that goes to the company executives and to the rich people who buy stock in those companies. Yes, we do own stock in companies through our 401(k) accounts but these bastards always manipulate the stock market so we never get ahead anyway.
Now you can see how taxing the rich works because it takes their money away from them before they can use it for any of those things that only the rich can do. Now the money goes to the government so they can use it to give to people who are struggling and do not have a job or have a lousy job that does not pay enough for them to live on decently. Of course, this does make us somewhat dependent on the government for our survival but it is free money. Naturally since the government is dispensing this money it will have to set some rules about who gets this money and what we do with it. But since we decide who runs the government this is not a problem. We still get this free money and so putting up with some bureaucrats telling us what to do is no big deal.
Naturally the folks running the government expect you to vote for them so they can keep finding more ways to tax rich people so they will have more money to give us. Of course, a fair amount of this money will have to go to government employees so they can make more laws and set rules and regulations to make sure we spend the money they have given us properly. Now you know enough about politicians to now that another bunch of that tax money will go to grease the palms of their buddies who have made substantial contributions to their re-election campaign. But hey, that is the way the system works so you can get the money from the rich who do not deserve it and do not need it. So maybe only half of that money ever finds it into the pockets of those who are not rich but something is better than nothing.
Now you can see the advantages of taxing the rich. They do not need all that money to spend, put in banks to loan folks and invest in businesses to make still more money. Of course, if they do not do that with their money there will not be enough money available to borrow from banks or to lend to new businesses to hire more employees. This is also not that big a deal because the government can just print more money to give to companies so they will do that. That way the young people who just got out of school and need a job can find one. Your kids who now need a job or your friend who got laid off can find work eventually as soon as the government dispenses that newly printed money and those new companies get those buildings built and the machines bought. Now the poor people who did get the money can go down to Wal-Mart and spend the money to buy some things that they could not afford before. Of course, those goods were made in China so only the employees at the Wal-Mart and the fat cats who run it got paid.
That is not a problem since your kids and the laid off friend can always go down and get a job at Wal-Mart until the government figures out how to get all that new money spent. Of course, Wal-Mart jobs do not pay very well but we can fix that by unionizing Wal-Mart and make it pay better wages. That will raise the prices at Wal-Mart but we can take care of that by raising the taxes on the rich some more. So now you see what a good deal it is to just make the rich give most of their money to the government so we can get our half of it. There is a small downside to this though in that who would want to get rich if the government is going to take away most of the money they make over $250,000 a year? Unfortunately there will not be much encouragement for people to work hard and get rich so the government can take most of their money away from them to give to us. We can solve that easily by raising taxes higher on those that are already rich.
Think of how much better it will be to not have to work so hard for a living or even to work at all and let the rich take care of the rest of us. That way we do not have to worry about unemployment because we can just go on welfare. Of course, with fewer people working, fewer people will be paying taxes so we will have to change our definition of who is rich to those making more than $100,000 a year so there will be more rich people to tax. Eventually we will have to get down to those people making more than $40,000 before we take most of their money away from them above that amount in taxes. Oops, people making only $40,000 a year are not rich; they are the middle class. Something has gone wrong with this idea.
It sounds like the rich are getting poorer but we are not getting richer. Instead our taxes are going up so anything we have gained is going to people who are poorer than we are. How are we better off with this plan in the long run? Gee, maybe it is better to let the rich people keep most of their money so there will be money to lend and create decent paying jobs with good wages. Damn, maybe socking it to the rich does not work so well after all. How about that? Then why are President Obama and the Democrats in Congress proposing that we do this? Damned if we know; you will have to ask them to explain how this works out so well. We must be missing something on how us poor folks can get ahead under this scheme of theirs.
We Cannot Just Say No
If those of us who are opposed to the current administration and Congress let those same folks ingrain the idea in the body politic that we are merely obstructionist, we are doomed. To just say no is to say we support the status quo and are convinced that since nothing is broken, nothing needs fixing. There are many things in America that are broken and need fixing and everyone should agree on that. The argument is over how to fix what is broken.
Liberals think that the government can fix all these broken things if we will just give them the authority to do so. The rest of us know better because what has government ever done right? History shows that government screws up everything it touches beyond all reason and belief. Civil servants have no vested interest in getting things right. They are only interested in covering their asses so they can keep their position at the public trough. Individuals and competitive profit making business have a vested interest in getting it right.
We need a forum for our proposals on how to fix what is broken. General principles can be done easily such as the ones at: PUMA Coalition Positions. The problem is that philosophical positions are not grabbers with the general voting public as opposed to political activists. To convince the non-activists to join us requires that we have specific solutions to solve known problems. We are going to take a stab at offering some fairly radical ideas on providing these fixes in the order that they are important to the American People as delineated by Rasmussen Reports.
These are: Gov't Ethics/Corruption, Economy, Health Care, Nat'l Security/War on Terror, Social Security, Taxes, Education, Immigration, War in Iraq and Abortion. Each of these problems is laid out along with our proposed solutions at www.marstonchronicles.info
Government Can Create Jobs ... Just Not Real Jobs
Job Creation 101
The government has a role to play in the economy, it can either encourage an economy to grow or persuade an economy to shrink. President Kennedy stated that tax cuts creates jobs and salaries that create more jobs and salaries. This result comes about when the government helps the economy by lowering the tax burden on industry and the individual. This was also the strategy employed by Ronald Reagan as he led the United States out of the most serious recession since the Great Depression. George W. Bush also lowered taxes, which created an economic boom for most of his time in office.
The government persuades the economy to shrink when it takes over the role of "job creator" from the American people. Franklin Roosevelt believed that it was the government's responsibility to create jobs and he was right in his belief that government can create jobs. In fact, anybody can create a job. To paraphrase the economist Milton Friedman jobs can be created simply by "handing somebody a shovel and paying him to dig a ditch and then finding somebody else to fill in the ditch." We have theoretically created two "new" jobs. What President Roosevelt did not realize was that government can not create jobs at the expense of the private sector. President Roosevelt increased taxes to support the massive government "recovery" programs he instituted. Roosevelt honestly believed that the government could run an economy better than the private sector. His attempts to end the depression were devastating and made things worse.
Lets take a look at the minimum wage, Roosevelt saw that Americans were suffering and they were suffering because they were not receiving enough income. The problem with using a minimum wage to repair this problem is that it leads to more unemployment. Imagine that you are a business owner during the depression and you have about seven employees. You make just enough to turn a profit and you pay your workers accordingly. Now Roosevelt institutes across the board tax increases in order to fund his programs and the minimum wage. You now have to fire some workers to maintain your level of profitability and still pay the new wages and taxes. Now the nation has a few more people added to the social program's books and now we need even more taxes to fund these programs. The higher taxes causes more businesses to fail and more people on the unemployment line.
Roosevelt also made the same mistake with prices. Wages were too low and prices were too low, so he sought to ARTIFICIALLY increase both. He saw that farmers were struggling and tried to manipulate the market price of produce by enforcing new regulations that limited the amount a farmer could plant and the price on the market.
So the point is .... "President-Elect" Obama is attempting to employ the same strategy to bring the United States out of a recession. He has proposed massive government infrastructure programs through the construction of new roads, public buildings, bridges etc. etc. etc.
But this is the same as "handing somebody a shovel" ... these new infrastructure plans will only create the jobs needed for the construction and no more, when a school is built ... it is built, end of story. Obama also fails to recognize that we do not live in the 1930s anymore. American citizens were more likely to be able to work as construction laborers then. After all, the hardest hit sectors of the economy included heavy manufacturing. The artificial jobs created by the government in the Great Depression could, at the very least, offer temporary employment to the out of work laborers. However, the unemployed today include many more white collar workers, such as accountants, bankers, and workers in the technology industries. The unemployed today are not nearly as prepared for heavy labor as they were in the 1930s and 1940s.
It is also important to note that FDR's plans did nothing to ease the Great Depression.
Why? ... because government can only create artificial jobs that do not lead to "more jobs and salaries that lead to more jobs and salaries."
