The State of America’s Private Sector 29: December, 2011

The U.S. Department of Commerce’s Bureau of Economic Analysis recently released their monthly personal income data for December, 2011 (pdf). The chart below shows the private sector share of personal income from January 1959 to December2011. For December, the private sector share of personal income was 70.88 percent.

While the private sector continues to claw it’s way back up (after cratering in May, 2009 at 69.06 percent), the current level is still well below the pre-Great Recession level of 74.48 percent in June 2007. With the aging of the baby boomers and Obamacare looming, it’s doubtbul that we will ever get back to pre-recession levels. We will all be poorer as a result of a smaller private sector.

Chart Showing Private Sector Share of Personal Income by Month from January 1959 to December 2011

“The Penny Plan” to Eliminate the Federal Deficit

four cents
Creative Commons License photo credit: Robert Couse-Baker

We all know that Uncle Sam’s trillion plus dollar budget deficits are unsustainable. Debt is now larger than Gross Domestic Product and we are well on our way to Greece-level debt (and that excludes our “off the book debt,” see sidebar for our true debt levels . . . around $77 trillion). Adding insult to injury, the states are running huge debts of their own.

At some point, Uncle Sam is going to have to sober up and face reality. The reality is that the budget deficit needs to eliminated and budget surpluses must become the norm (American households need to listen up as well).  One solution that I recently came across was “The Penny Plan.” They describe the plan as thus:

The One Cent Solution is beautifully simple: If the government cuts one cent out of every dollar of its total spending (excluding interest payments) each year for six years, and then caps overall federal spending at 18 percent of national income from then on, we can:

  • Reduce federal spending by $7.5 trillion over 10 years.
  • Balance the budget by 2019.

Moreover, instead of using inflated budget “baselines” to claim nonexistent spending “cuts” a common practice in Washington, the One Cent Solution calls for real cuts.  Under the One Cent plan, the sum of all discretionary and entitlement spending will have to go down from one year to the next, by one percent or more.

Another cool feature of the Penny Plan is that it comes with anther great Remy video shown below.

But alas, I fear even this attempt may be too little too late. Even with a balanced budget by 2019, we will still add trillions of dollars to the national debt. Thanks to President Obama’s policies, the national economy will still be struggling to recover over the next few years. This is a recipe for an explosion in our debt-to-GDP ratio. Check out this history of recent debt ceiling increases to see how unsustainable our path already has become.

And if it all becomes too depressing, turn to Remy again for some more amusement with “Raise the Debt Ceiling.”

Unions Win: Right-to-Work Fails in New Hampshire

Verizon_Workers_Strike-0401
Creative Commons License photo credit: pweiskel08

Just moments ago, the New Hampshire House attempted to override Gov. Lynch’s veto on Right-to-Work. Unfortunately, the veto override failed 240-139, a mere 14 votes shy of the needed two-thirds.

However, the supermajority vote in the Senate and near-supermajority vote in House shows that there is very strong support in New Hampshire for Right-to-Work. New Hampshire is only one supporting Governor away from enacting Right-to-Work which could happen as early as 2013 (New Hampshire’s Governor is on a two-year term and Gov. Lynch has announced he will not run again).

Another thing we should also worry about are the actions of the anti-Right-to-Work forces who stopped at nothing to get their way. Consider these shenanigans as reported by New Hampshire Speaker O’Brien:

That’s why I have become seriously concerned about the coercion, threats and outright intimidation specific to the Right to Work issue that we have learned some of our colleagues have suffered. Here are several examples, some of which have just come to me today:

• One older representative was told that public emergency personnel might not respond in a timely fashion if they learned of a problem at this representative’s home after a vote to support Right to Work.

• Another representative’s daughter attending a public school was told that she would not be an appropriate candidate for a captain of her basketball team should her parent vote in support of Right to Work.

• Yet another representative who has been supporting the veto override was first told by his public employer he had to work tomorrow. Then he was unexpectedly called in by the head of the employing agency and told that he would be allowed to go to Concord to vote, but that, given the presence of the two unions that had members at the agency, he really needs to vote against Right to Work.

• A representative’s spouse was threatened on the job based upon a vote for Right to Work, leaving that spouse with the impression that he might lose his job or suffer worse consequences if that vote was not for the union bosses.

• A representative’s spouse was told in a telephone call from a senior union official that their pension could be in jeopardy if this representative voted in favor of Right to Work.

These are examples that go beyond the pale, yet do not include the numerous other instances in which union bosses have subtly implied veiled threats against representatives on this issue.

How many more instances of intimidation went unreported? These tactics simply do not belong in America.