Chicken or the egg dilemma on government spending
[Benefits spending soars to new high]
[U.S. unemployment hits record but job losses slow]
Two interesting, and in my view, conflicting stories this morning. One tells us that thanks to government spending, 16% of all Americans’ income comes from the government. In other news, unemployment rises, but at a lower rate. Which begs the question, which came first?
Obviously, there are some people who would be on public assistance no matter what. However, with the rapid government spending and taxes increasing in many states, it is unclear if the government’s actions pushed people to the unemployment line.
The idea that government spending will create jobs essentially gets thrown out the window when these stories are viewed side by side. Furthmore, evidence that temporary jobs, including the 2010 census, hide greater unemployment makes the futility of the stimulus even more apparent. It does America no good to become an employment agency every time there is an economic downturn. Government jobs on pet projects of powerful senators seem to be the most that this administration can offer.
Government spending has done little to nothing to make a long-term impact on unemployment. The jobs created, including those created here in New Jersey, have been touted as “shovel ready” and a means of curing the current economic ills. The problem is that the people working this job will be out of work once it is over. This is not a solution to the problem, but merely a bandage.
So as more and more money is spent to support Americans who wind up out of work, government needs to raise more money by raising taxes. Cutting services seems to be a concept beyond the “leaders” in our government.
I do not believe that the high rate of contribution to the American income that the government is undertaking now is an effect of unemployment, but is in fact the cause.
