American dependency: Is this the new normal for the economy?
While reading an article in the Monday Washington Times a word jumped off the page. Is was: "normal."
The article said "the economic recovery that began last summer is tenuous and has a long way to go before many Americans resume life as normal, analysts said."
It made me think of that article in October 2008, before the election, in The Wall Street Journal by Arthur Laffer, which came out about the same time as his new book: "The End of Prosperity: How Higher Taxes Will Doom the Economy — If We Let it Happen."
Laffer pointed out at the time, "Whenever the government bails someone out of trouble, they always put someone into trouble, plus of course a toll for the troll. Every $100 billion in bailout requires at least $130 billion in taxes, where the $30 billion extra is the cost of getting government involved."
Which brings us back to the Washington Times article, which contained some astonishing figures.
Transfer payments from the government in 2009 — such as unemployment, Social Security, welfare, etc. — climbed to $2.1 trillion. Meanwhile, the taxes paid by individual Americans fell to $2.1 trillion.
By Laffer's calculations we are already in the hole $630 billion.
Is this the new normal? Is this the end of prosperity?
