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Analyst: Obama has U.S. economy in 'death spiral'
Posted By Bob Unruh On 07/04/2010 @ 6:51 pm In Front Page | Comments Disabled
A new analysis of the U.S. economy shows that since 2007, the private sector has lost 10.5 million jobs while the public sector has added 720,000 jobs, creating a “death spiral” for the nation’s economy.
The study comes from The Free Enterprise Nation, a nonpartisan national membership/advocacy organization for individuals and businesses that make up the private sector.
The analysis was done using statistics about employment data from the U.S. Bureau of Labor Statistics.
The recession of the last two years exacerbated the larger problem that already was in place, it revealed.
“Over the 10-year period between March 2000 and March 2010, the private sector lost over three million jobs, while the public sector gained nearly two million jobs,” the analysis concludes.
Among the changes were California’s loss of 665,800 jobs in the private sector. But government in the Golden State added 163,800 jobs.
Also, Michigan lost 791,700 private-sector jobs, a “staggering” 20 percent. Government bureaucracies, however, kept all but 7 percent of their positions.
Jim MacDougald, president and CEO of The Free Enterprise Nation, recently appeared on the Fox News Channel to talk about a new campaign called “I own you.”
“The consequence of this employment shift is that a smaller number of private-sector employers and workers are saddled with the tax burden of financially supporting a growing government workforce,” said MacDougald.
“Since public-sector workers are paid more on average in compensation and benefits than private-sector workers, it is financially unsustainable for the government to continue to grow while the private-sector workforce shrinks,” he said.
He explained to WND that while the problem is massive, there is the potential for a solution.
“There are 89,000 taxpayer-supported entities that make up the ‘public sector,’ and no one is in charge of their collective efforts. About one-half of the 22 million public-sector workers are in public education. (And only about one-half of the people employed in public education are teachers!)” he said.
“It is possible that the federal government thinks it can solve the unemployment problem by hiring more people, but, if so, it would be another indication of just how far removed from reality the federal government’s economic policies are,” he said.
“Our population grew by 25 million from 2000 to 2010. We needed to create at least 20 million new jobs. Instead, we lost 3 million in the private sector. The ‘shortfall’ of 23 million jobs could not possibly be made up by government hiring, as they would have to double in size in order to do so,” he said.
The real problem is not necessarily with the number of government jobs but the cost of their “huge pensions, early retirement and health-insurance benefits.”
“That is where the real ‘cost of government’ is,” he continued. “As numbers of workers in the private sector decrease, and public-sector hiring increases, it places an impossible burden on those individuals and businesses left who actually pay taxes.
“Unfortunately, the current approach is to charge more taxes to those who actually pay federal income taxes (one-half of tax filers), and businesses. Businesses (employers) have no choice but to reduce overhead, which means fewer domestic workers. A death spiral,” he warned.
The solution would be a hard pill to swallow for many, he warned.
Among the moves that would help would be to terminate all government pension plans, “vesting everyone 100 percent in benefits accrued to date.” Pensions could be replaced with a type of 401(k) retirement plan that is funded by employer contributions.
Then there would be need for a hard look at what government actually does.
“Do we NEED government to do that for us? If not, stop doing it,” he said.
Next would be to ignore – or better yet banish – public-sector unions.
A “zero-based” staffing and budget plan would require officials to review what work is required and how many workers are needed to do it.
“Public policy-makers must ask: How many people do we NEED to do what we are hired to do? Do we really NEED one administrative/management employee for every teacher? Once those questions have been asked and answered, we must rebuild each public-sector entity from scratch,” he said.
“We have to ‘reinvent’ the public sector, based on a fundamental requirement that it serves the taxpayer, not the other way around. It is a huge job to do, and it will take years. There is no silver bullet. But it can be done,” he said.
And longtime top-rated radio talk-show host Roger Hedgecock said more and more federal spending just depresses the economy.
“Three professors at the Harvard Business School, in a study titled ‘Do Powerful Politicians Cause Corporate Downsizing?’ have concluded, based on 40 years of data, that federal government spending does not stimulate local business spending. In fact, the opposite occurred. The more federal spending, the less corporate spending,” he reported.
“And the same results show up whether the state is large or small, whether the firms are large or small over a period of 40 years. In fact, the study shows the results ‘most pronounced in geographically concentrated firms and within the industries that are the target of the spending.’ In plain speech, federal ‘bacon’ is toxic to economic growth in the private sector,” he wrote.
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