As Government Aid Fades, so may the recovery

An extraordinary amount of personal income is coming directly from the government.

Close to $2 of every $10 that went into Americans’ wallets last year were payments like jobless benefits, food stamps, Social Security and disability, according to an analysis by Moody’s Analytics. In states hit hard by the downturn, like Arizona, Florida, Michigan and Ohio, residents derived even more of their income from the government.

By the end of this year, however, many of those dollars are going to disappear, with the expiration of extended benefits intended to help people cope with the lingering effects of the recession.

Read it all.


Posted in * Economics, Politics, Consumer/consumer spending, Economy, Personal Finance, The Credit Freeze Crisis of Fall 2008/The Recession of 2007--, The U.S. Government

15 comments on “As Government Aid Fades, so may the recovery

  1. Scatcatpdx says:

    Taking the faulty statistics of the article, if $2 out of $10went into American’s collective wallet then one must remember we started out with $12.5 before taxes. No wonder why we are in a funk. We’re robbing Peter to pay Paul and Peter is all tapped out.

  2. Sarah says:


    “The recovery” may “fade”?

    How terribly frightening! Money the State took from us and then gave to others may not be given to them any more?

    Goodness me — how terrible that “the recovery” may go away!

    On a business-related note . . . maybe then that will mean we can actually start the recovery, now that we’ve delayed starting on that for several years by just printing money and dropping it from airplanes.

    What an incredible waste of time [not to mention the money and energy] the past 3.5 years or so has been.

  3. paradoxymoron says:

    What recovery?

  4. paradoxymoron says:

    Oh, the recovery by Democrats of Congress? That recovery?

  5. drjoan says:

    Somehow the idea that $2 goes to someone who likely is NOT paying any federal income tax while BHO is saying he must have those making more than $200,000–and ALREADY paying 51% of the federal income tax total–is confounding.

  6. Cennydd13 says:

    Does anyone besides me think that the present occupant of the Executive Mansion is not going to win reelection? Right now, I think he has a snowball’s chance in Hell. Recovery? Yeah……right! Sure! Uh-huh! In a pig’s eye!

    [i] Please do not change the topic of the thread. [/i]


  7. Capt. Father Warren says:

    One definition of Keynesian economics: pulling a bucket of water out of the deep end of the swimming pool and running to the shallow end to pour it in………….then wondering why the level of the pool does not rise? Actually the level falls because water splashes out of the bucket in rush from one end to the other. The water splashed out represents the inefficiency of Government. Almost sounds like a parable doesn’t it!

  8. David Keller says:

    #5–People making over $200K pay 90% of federal Income taxes. 49% of Americans pay no income tax at all. 100% is paid by 51% of the people.

  9. Cennydd13 says:

    David Keller, I think it’s fair to say that retirees who receive Social Security pay income tax on what they receive every month, so let’s not include them in that 49%. It is considered to be income.

  10. In Texas says:

    #9, I don’t think #8 was saying that people receiving SS were not paying income tax. It’s just that we are hearing “the rich need to pay their fare share”. Since the Clinton years, the tax code has evolved to the point that “income tax” (not talking about medicare, SS tax payments, just federal income tax) is only being paid by 51% of Americans, the other 49% do not pay any federal income tax. Further, many workers not only pay no federal income tax, they actually get money given to them via “earned income credit”. The Bush tax cut were incorrectly termed “tax cuts only for the wealthy” because every federal income tax payer received a tax cut. You can’t give a tax cut to someone that doesn’t pay any taxes.

    Looking at the IRS web page for tax statistics (,,id=96981,00.html) related to income. In 2008. for those that submitted federal returns, people earning from $1 to $100,000 (adjusted gross income) paid around 25% of the total tax revenue. Those making more than $100,000 paid 75% of the total tax revenue. The average effective tax rate, as percentage of AGI for the < $100K was 11%, while > $100K AGI had an average effective tax rate of 26%. Looking at the average income tax paid for my salary range, it looks like I’m paying 50% more than most, I guess I should find a good tax lawyer :).

    My wife is disabled with MS, she was officially declared disabled by SS, but she does not receive any disability benefits. She was a school teacher, paid into SS for 14 years, then worked in a state where teachers did not pay SS (they paid into a state system) then she stayed home with our son till he was old enough to start school, then she went back teaching. Since she did not have enough SS credits in the last ten years she worked, she gets no benefits. When she asked the SS if she would at least get the SS money she paid in the first 14 years, the SS agent has honest enough to say “it doesn’t work that way”.

  11. Cennydd13 says:

    Sad to say that I agree it doesn’t “work that way.” The System needs to be revised, of course, and I agree 100% that those who can afford to pay more according to their earnings should pay more, and all of their tax loopholes must be closed in order to make the System fair to everyone.

  12. Teatime2 says:

    #10 — Wow, I’m sorry about your wife’s situation. Our Texas Teacher Retirement System is the pits. I had well more than enough SSA credits when I changed careers to teaching and I did some other work while teaching that paid into Social Security. When I became disabled, the TRS benefit was pathetic. I elected to take it as a lump sum to help with my medical bills and to buy a smaller home. TRS Blue Cross/Blue Shield was bad, too.

    Something that could help Social Security is if more states and/or school districts/municipalities had the option to pay into Social Security instead of the state retirement systems.

  13. clayton says:

    #8 – sure, they pay 90% of the income taxes collected (ignoring every other kind of tax, many of which are quite regressive); but if you look at the income equality picture (the income gap hasn’t been this bad since 1928), that’s not too surprising:

    Top CEO salaries were up 23 percent last year, according to the New York Times; the average worker’s pay was up only .5 percent. Meanwhile, the top 0.1 percent of American earners now take in more than 10 percent of the nation’s collective income. That puts the U.S. in the same inequality ballpark as developing countries like Cameroon and Ivory Coast.

    And that’s why we’re screwed. This country can’t survive without a middle class and some hope of upward mobility based on hard work and innovation and making actual things in actual factories with people who are paid a decent wage. Instead we’re squabbling over who gets the last crumb on the plate while we slip into a third-world-style oligarchy.

  14. Teatime2 says:

    Yes, it’s a smokescreen to say that the wealthy pay the lion’s share of taxes without probing into why that is. Gee, could it be affected by the growing disparity between the rich and the poor?

  15. Capt. Father Warren says:

    No smokescreen, those are the facts. Before getting all worked up about the “gap”, let’s remember that the great economic upswing of the late 1900’s and the growth early in this century raised the incomes of ALL Americans; even those dependent on Social Security.

    The class-warfare approach is to look at the most successful, economically, and seek to tear them down. Those successful ones make the investments that provide jobs for the rest of us. Sure you really want to go down that path?