Case for Balanced Budget, Plus a Jobless, Wageless Recovery

Townhall.com ^ | July 5, 2011 | Mike Shedlock

[Kaslin]

Inquiring minds are investigating Personal Transfer Receipts.

Personal current transfer receipts are benefits received by persons for which no current services are performed. They are payments by governments and businesses to individuals and nonprofit institutions serving individuals.

Personal Current Transfer Receipts Examples

• Medicare
• Medicaid

• Food Stamps
• Social Security
• Unemployment Insurance
  

Notes

• Nearly every dime of federal government receipts goes to personal transfer payments.
• Between 1960 and 1970, personal transfer payments were 30-35% of federal government receipts.
• From 1980-2000 the percentage fluctuated between 50% and 65%.
• If (when) the economy slips back into recession personal transfer payments will exceed 100% of federal government receipts.

Personal Current Transfer Receipts



Note that transfer receipts are nearly $2.4 trillion.

Federal Government Receipts 



Ratio of Personal Transfer Receipts to Federal Government Receipts



Given personal transfer receipts take up nearly 100% of federal government receipts, in theory, there should be no room for anything else, including wars, roads and bridges, and wages of federal employees.

Unfortunately, the government wastes money on wars, wastes money on bureaucracies that should not exist, and overpays on roads, bridges, and infrastructure (because of Davis-Bacon, collective bargaining, and prevailing wage laws).

The only way to remedy this is with an iron-clad, no-exceptions, balanced budget amendment.

Please consider a collections of charts from The “Jobless and Wageless” Recovery from the Great Recession of 2007-2009. Annotations in red (where present)are by me.

GDP 2007 Q4 - 2011 Q1



GDP made a new high but look at the amount of US fiscal stimulus from Congress, monetary stimulus from the Fed, and global stimulus especially China, that it took to achieve that.

Nonfarm Jobs



Total Civilian Employment



By the "end" of the recession the US economy shed 7 million nonfarm jobs and 6 million civilian jobs. Since the official end of the recession, there has been a small net loss of both nonfarm jobs and civilian jobs.

Mean Weekly Private Sector Hours 



Mean weekly hours have risen by .5 hours since the recession ended but are still .2 hours below the start of the recession.

Change in Civilian Jobs vs. Prior Recessions 7 Quarters Later



Private Sector Real Hourly Earnings in Constant 201o Dollars



Thanks to the Fed specifically and central bankers in general, real wages are below where they were when the recession ended.

Real Median Weekly Earnings Full-Time Wage and Salary Employees in Constant 2010 Dollars



Trends in Annualized Wage and Salary Accruals CPI-U Adjusted 2010 Dollars



Annualized Value of Corporate Profits in Constant 2010 Dollars



Snip from the report ....

"To date, through the first quarter of 2011, the nation’s recovery from the 2007-2009 recession is both a jobless and a wageless recovery. Aggregate employment still has not increased above the trough quarter of 2009, and real hourly and weekly wages have been flat to modestly negative. The only major beneficiaries of the recovery have been corporate profits and the stock market and its shareholders. Most holders of savings and money market accounts also are net losers due to declining real interest rates which have been in negative territory for many interest bearing and money market accounts."

There are more charts, tables and commentary in the 23 page PDF report.

Given the global economy is clearly weakening (disregarding inventory building and the latest US manufacturing ISM numbers), there is every reason to believe the jobless, wageless, "state of affairs" will last.

Notice I called it "state of affairs". The recovery, if that is what one wants to call what we had, is on its last legs.

For a look at the latest manufacturing ISM numbers and trends in other countries, please see Manufacturing ISM Weaker Than it Looks; Digging Into the Numbers; Inventory Restocking Accounts for Much of the Rise

[The Sons of Liberty]

Here's clue: Call it what you like, for those who had a job before 0bama and his gang of thugs came in and destroyed the economy, It's No Recovery! It's the 0bama Depression!

[Kaslin]

You got that right, and the liberals can deny it all they want to

[ex-snook]

It’s No Recovery! It’s the 0bama Depression!

---

Tell us how it would have been different if McCain was elected.

[The Sons of Liberty]

Tell us how it would have been different if McCain was elected.

I don't believe that McLame has the backing of the American Communist Party like your boy Hussein.

[ex-snook]

Aside from the BS. How would a McCain economy be different than Obama’s?

[The Sons of Liberty]

Well snookie, I guess we’ll never know. You seem to think you have all the answers, tell us.

[ex-snook]

Economy would be the same and will continue to be the same until we get a President who hears the sucking sound of jobs leaving the country in trade deals. We have to make more of what we import to create jobs and I don’t see any candidate running on that. Clinton = Bush = Obama = Whoever

[familyop]

"Economy would be the same and will continue to be the same until we get a President who hears the sucking sound of jobs leaving the country in trade deals."

Yes, but a president and members of congress who will also see the waste of too many government employees, administrators and non-productive service businesses that exist only by receiving revenues from the same. And a whole lot of pensions received by bureaucrats, overly expensive, REMF-y hippie-era contractor employees, administrators and other politically correct employees of the recent past should be cut by large proportions.

But then the default ahead will take care of all of that, won't it. Prepare. Avoid buying anything that you don't need (to avoid feeding the revenue suckers). Become technically inclined and self-sufficient. Learn to manufacture a necessity as a hobby, for now. Enjoy the slide and the deposition of the worthless.

[tomd2]

Would you start a new business now? If so what?

[familyop]

BTW, it’ll be a pleasure to see public education trimmed in the default process, along with many of my political Baby Boomer peers, drunk/stoned on big government revenues. Most of them don’t know what real work is. As for politicians, nearly all of them in both political parties are socialists.

[Mister Da]

I don't think McCain would have signed Obamacare after the way it was crammed down our throats.

McCain would not have bowed & groveled before ME potentates, nor alienated our allies.

Poland would have gotten the antimissile shield.

McCain would have done the Afghan surge 6 months earlier, as requested, & at the troop levels requested.

McCain would not have been suckered into the Libyan war as was Obama.

McCain wouldn't have appointed 2 feminazis to the Supreme court. Probably 2 moderates.

McCain's Attorney General would have prosecuted the Black Panther thugs.

With Sarah Palin as VP, McCain MIGHT have been convinced to “Drill, baby, drill”.

I could go on, but I might vomit.

I'm no fan of McCain - not at all, but ANYBODY could have done a better job than Obama. ANYBODY!

[ex-snook]

But I didn’t read anything about how many jobs he would have created to improve the economy.

[Mister Da]

A different attitude, a patriot's love of America, & a sense of responsibility could have well created a better economic atmosphere, thereby creating or saving jobs lost.

The Gulf Drilling moratorium cost 30,000 jobs, alone.

Drill, baby, Drill would create thousands of high paying jobs & stimulate untold related/unrelated businesses.

The threat of Obamacare is limiting new hires.

Those are jobs McCain could have easily created/saved. Obama did not.

As much as I disagree with John McCain, there is NO question in my mind that he would have be a better President in many ways than Obama. Great, no, but better.

[mrsmith]

McCain would have thrown away about half as much on ‘stimulus’ than Obama did. And on slightly less ridiculously wasteful projects.

Leaving about $1 trillion more dollars in the economy.

At $250k per, $1 trillion translates into 4 million more jobs if I did the math right....