1 in 6 Dollars of Income Now Via Government; Highest Since 1929

Quite an impressive economy we are transforming into. Do you see how the shell game is working? We borrow from the future [Mar 31, 2009: Financial Rescue Pledges Now $12.8 Trillion] to give to the current, whether it be financial oligarchs, states [May 5, 2009: Federal Aid Surpasses Sales Taxes as Top Revenue Generator for States], or indeed our individual citizens. We wave our hands in random order and scream this is prosperity. [May 19, 2009: Paper Printing Prosperity Defined] As record numbers go onto food stamps and on public assistance. Indeed.

This is what happens when you rip apart the middle class to give to the elite 0.2%. People lose the ability to provide for themselves in greater number. Living standards for the bottom third continue to decline. It’s not just a political logo – we are moving to a bifurcated America. Maybe not 2 Americas… perhaps 3. Just wait until the "success" of the Federal Reserve attacks the lower 3rd group in the form of the most regressive tax, inflation, in the years to come.

Via USA Today: Benefits Spending Soars to New High

… one of every six dollars of Americans’ income is now coming in the form of a federal or state check or voucher.
Benefits, such as Social Security, food stamps, unemployment insurance and health care, accounted for 16.2% of personal income in the first quarter of 2009, the Bureau of Economic Analysis reports. That’s the highest percentage since the government began compiling records in 1929.
In all, government spending on benefits will top $2 trillion in 2009 — an average of $17,000 provided to each U.S. household, federal data show. Benefits rose at a 19% annual rate in the first quarter compared to the last three months of 2008.

So let’s review, we just piled on $55,000 of new debt to every American household just in 1 year last year. [May 29: In 1 Year US Taxpayers on Hook for $55,000 More per Household] And we gave back $17,000 to each household. Do you see where this is heading?

Now let me be clear I’m an advocate for social safety nets that make sense, i.e. the food stamp program is critical. (Heck, I’ve been talking about this issue for 2 years while the pundits were telling you there would be no recession) I just want you to think about why we are in the shape when over 1 in 10 Americans are now on food stamps. [Feb 20, 2009: NYT – Newly Poor Swell Lines @ Food Banks Nationwide] In the richest* country on Earth. [Dec 8, 2007: Do the Bottom 80% of Americans Stand a Chance?]

*excluding debts

Some detail:

Unemployment insurance. One-fourth of the extra spending covers jobless benefits, a program started in the Depression. The stimulus law, passed in February, increased benefits.
Social Security. The bad economy has prompted a 10%-15% jump in early retirements, the program’s actuary says. A 5.8% increase took effect January 1. Bottom line: $55 billion in new costs.
Food stamps. Enrollment hit a record 33.2 million people in March, up 5.2 million from last year. The stimulus law boosted the size of the benefit. Average March benefit: $114 per person.

Adam Lerrick, economist at the conservative American Enterprise Institute, says the benefits’ explosion will eventually lead to an economic crisis. "We’ve seen this movie before in many countries. It always has the same ending," he says.