As you can see, government transfers of funds to households exceeded taxes paid by households as a percentage of personal income. For the first time since 1936. And the gap is growing.
In raw numbers, in February of this year, households received $2.3 trillion in income support from unemployment benefits, Social Security, disability insurance, Medicare, Medicaid, veterans' benefits, education assistance and other cash transfers of government funds to individuals. ........................................ .................................. While we certainly don't view any slackening in the flow of tax money to be a bad thing, the lack of any fiscal accountability on the part of government is. If it takes in less, it should spend less, just as citizens are forced to do. It hasn't, as we know all too well. But there's another aspect to this, too.
Yes, consumers have had to do a bit of belt tightening since the economy went south. However, the government has stepped in and taken up a good measure of the slack. That in turn has promoted consumer spending that would not otherwise have been possible among those not allowed to run massive deficits. So what happens when the gravy train slows down?
In order for the lines on the graph to revert to their average, about $1.2 trillion in income would have to be added to the economy. No one sees that coming, at least not over the next few years. Jobs simply cannot be created quickly enough.
Then, as unemployment benefits, temporary tax cuts, and other stimuli expire, a serious further crimp will be put in people's ability to spend. If this were to take place within the context of a robust recovery, it might not matter all that much. But in today's sluggish job market, it matters a lot. Less spending translates, ultimately, into more lost jobs and the threat of a second - and potentially more severe - recessionary dip.
Well I do not know about you but I do not consider Social Security a hand out. The average worker pays a little over 15 percent of his income in taxes. Of course you can try to claim that the employer pays it but only the tooth fairy believes that to be the truth. Social security tax is one reason why they can hire so many h1-b and L1 visa. Medicare is funded by taxes by the worker. Disability is funded by the Social security taxes paid by the worker. I am a vietnam veteran and I do not look at veteran benefits as a handout but then again I make more the $12,000 a year and I cannot get any veterans benefits.
our entire tax system has been destroyed by special interest who helped send all the jobs overseas which leads to the unemployment.
Hedge funds are taxed at capital gain rates only because they could get congress to go along with that crazy thought. Why would a hedge fun who is likely trade many times everyday be allowed long term status?
Tom, thank gawd you are an optimist! You'll be rich when you retire. I know it. Keep adding to your silver position. Little by little and soon you'll be thinking like a millionaire yourself. Remember MONEY ALWAYS GOES WHERE IT'S TREATED BEST! If it's going to Asia.. that should tell you sumpth'n. But you were there in the 60's when things were CHEAP (unfortunately so was life)!! Thanks for your service to America.