Rebound? In the first quarter of 2010, private business paychecks shrank to new lows, representing their smallest share of personal income in US history, while government-provided benefits (social security, unemployment, food stamps, etc.) rose to record highs.
With private sector jobs being lost, incomes declining and tax bases shrinking, the increases in government spending were both unsustainable and destructive. More was being spent by the government than earned by the private sector. Not only were taxes not covering expenses, impoverished states with insufficient cash on hand to meet obligations were holding back tax refund checks!
Note: Who, other than government, could pull off such a stunt – issuing IOUs to be paid when convenient? Taxpayers and borrowers who are unable to meet their obligations lose houses, have paychecks garnished and assets seized. Students, saddled with massive loans (often $100,000 or more), earning meager wages or unemployed – and prevented from declaring bankruptcy by the prolender federal law – become indentured servants.Some 8.5 million people (7.4 percent of the workforce) lost jobs since the Great Recession began, while local governments cut only 141,000 workers … less than 1 percent.
As the private sector contracted, government employment barely declined. By 2010, a record-low 41.9 percent of the nation’s personal income came from private wages. Moreover, government workers, traditionally earning less than private sector counterparts, were now earning double in wages and benefits; $120,000 public vs. $60,000 private.
Not burdened with competition, unconcerned with the next quarter’s profit, and with no obligation to satisfy shareholders, governments continued to keep their largely unproductive bureaucracies intact. Only the “too big to fails” – be they Big Business or Big Government – cashed in on the bailout/rescue package/stimulus plan bonanza.
As the private sector contracted, state and local spending rose 2.3 percent, and federal spending was up 3 percent.
Covertly, the United States, staunch champion of “free enterprise” and harsh critic of Europe and other nations with bloated and entrenched bureaucracies, had become what it so despised: a bloated and entrenched bureaucracy.