Waging War On The Idea Of Government

The right's Perpetual Outrage Machine is blaring over this John Melloy CNBC article stating government outlays now make up some 35% of wages in America.

Even as the economy has recovered, social welfare benefits make up 35 percent of wages and salaries this year, up from 21 percent in 2000 and 10 percent in 1960, according to TrimTabs Investment Research using Bureau of Economic Analysis data.

“The U.S. economy has become alarmingly dependent on government stimulus,” said Madeline Schnapp, director of Macroeconomic Research at TrimTabs, in a note to clients. “Consumption supported by wages and salaries is a much stronger foundation for economic growth than consumption based on social welfare benefits.”

The economist gives the country two stark choices. In order to get welfare back to its pre-recession ratio of 26 percent of pay, “either wages and salaries would have to increase $2.3 trillion, or 35 percent, to $8.8 trillion, or social welfare benefits would have to decline $500 billion, or 23 percent, to $1.7 trillion,” she said.

OK, so what counts as "welfare" these days?  Social Security, Medicare, and unemployment insurance by far make up the largest chunk of that 35%, that last one, unemployment insurance, has certainly increased dramatically over the last two years.

But there's another contributing factor:  a decrease in wages and salaries over the last two years as millions of Americans have taken pay cuts, layoffs, furloughs, hourly cuts, and had their jobs eliminated completely and replaced with lower-paying service sector jobs and increasingly temp and contract jobs.  Even Melloy admits the government needed to intervene.

Social welfare benefits have increased by $514 billion over the last two years, according to TrimTabs figures, in part because of measures implemented to fight the financial crisis. Government spending normally takes on a larger part of the spending pie during economic calamities but how can the country change this make-up with the root of the crisis (housing) still on shaky ground, benchmark interest rates already cut to zero, and a demographic shift that calls for an increase in subsidies?

And I'll freely admit Melloy's right about the root cause being the housing depression.  Yet here he is asking for the government to do something about that, too.

Meanwhile, the right is going nuts.

If there's anything the last half-century of failed Leftist policies have taught us, it's this: when you reward sloth, you get more sloth. When you reward hard work, you get more hard work.

Funny, I could have sworn Republican presidents were mostly in charge over the last 50 years, signing their names to budget bills.  The guy who ended up with a surplus?  Clinton.  Yeah, he really ran up that debt, huh.  Gosh, I had no idea Obama was in charge of the country during the Greenspan housing bubble that necessitated this government intervention, either.

Guy must hate Reagan and the Bushes then.  Ol' Ronnie tripled our national debt, something glossed over time and time again.