Government becoming a bigger part of the economy

Although you probably already knew this intuitively, and it certainly comes as no shock given the enormous spending increases, it turns out that government is a bigger part of our economy than ever...and the private economy is a smaller part than ever: (via USA Today)

Paychecks from private business shrank to their smallest share of personal income in U.S. history during the first quarter of this year, a USA TODAY analysis of government data finds.

At the same time, government-provided benefits — from Social Security, unemployment insurance, food stamps and other programs — rose to a record high during the first three months of 2010.

Those records reflect a long-term trend accelerated by the recession and the federal stimulus program to counteract the downturn. The result is a major shift in the source of personal income from private wages to government programs. ...

Of course there is a multitude of philosophical / ideological reasons to have a problem with this, but the article goes on to point out the most practical reason.  It's unsustainable.  Meaning, the money to fund all that government spending relies on the tax receipts from the private sector, (either now or in the future when we have to pay off the money we've borrowed to make up the difference in the meantime).

At any rate, you don't have to look any further than Greece to see that this government gravy train won't roll on for too long before reality sets in.  In their case, over 2/3's of the Greek population currently receive some form of government subsidies or payments - which explains why their debt is over 115% of their GDP - which explains why they're going bankrupt and are being bailed out by other countries that are going bankrupt more slowly.

All of which also explains why liberals in this country are laying the groundwork for the push for a new Value Added Tax (VAT), on top of our current national income tax structure.  They don't want to cut the spending...so they'll have to raise taxes to keep the gravy train rolling.
Eventually, someone has to pay the bill.  Hold on to your wallets.

 

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