A new report by the Federal Reserve points to “widespread signs of deceleration” in the U.S. economy. No kidding!
These signs follow what the Fed calls a “burst” of growth in the last quarter of 2009 and first quarter of 2010 triggered by President Barack Obama’s $862 billion stimulus package. Unfortunately, the burst failed to help anybody except special interests such as unions and public employees.
Note the Fed’s evasive word choice: Another word for “decelerating” would be “contracting.” That’s what happens in an economy debilitated by high unemployment, government overregulation, spiraling public debt and whopping tax increases looming for the most productive people and businesses.
The Fed report warned that consumers are not spending like they used to. In other words, they are instead prudently doing what Washington, D.C., politicians seem incapable of doing: reducing debt instead of piling on more of it. Consumers are thus casting an overwhelming vote of “no confidence” in Washington’s ability to put the nation back on the road to prosperity in the age of Obama.
When you add taxpayer bailouts of ineptly or dishonestly managed corporations and a massive expansion of health care entitlements, it becomes clear that America is at a historic crossroads. We are fast approaching a tipping point where those dependent on government largesse outnumber those taxed to pay for it.
According to The Heritage Foundation’s 2010 Index of Dependence on Government, the number of Americans receiving a government check jumped nearly 14 percent in 2009 — the largest single-year increase since 1970 and 49 percent higher than in 2001. In May, the Bureau of Economic Analysis reported that the portion of personal income Americans received from private- sector paychecks declined to a record low of 41.9 percent, while income from government programs climbed 17.9 percent.
And with nearly half of wage earners now paying no federal income taxes, the burden of increasing levels of government spending on housing, health care, welfare, education and other entitlements is being borne by a shrinking pool of taxpayers.
However, as government control and dependency increases, American competitiveness at home and abroad decreases. The U.S. was ranked No. 1 by the Geneva-based World Economic Forum in 2008, but slipped to second last year and is now fourth — behind Switzerland, Sweden and Singapore.
In his 1835 classic “Democracy in America,” Alexis de Tocqueville prophetically warned, “The American Republic will endure until the day Congress discovers that it can bribe the public with the public’s money.”
Now that the politicians have made that discovery, the issue is what will the public do about it this November.