The recession is driving the safety net of government benefits to a historic high, as one of every six dollars of Americans' income is now coming in the form of a federal or state check or voucher.This Keynesian stimulus will help the US from falling into another Great Depression.
Benefits, such as Social Security, food stamps, unemployment insurance and health care, accounted for 16.2% of personal income in the first quarter of 2009, the Bureau of Economic Analysis reports. That's the highest percentage since the government began compiling records in 1929.
In all, government spending on benefits will top $2 trillion in 2009 — an average of $17,000 provided to each U.S. household, federal data show. Benefits rose at a 19% annual rate in the first quarter compared to the last three months of 2008.
What I find odd is that right wingers are anti-spending. But that is exactly what you need to counter a depression. In the US state governments are acting counter-cyclically by reducing spending in the teeth of this recession/depression. They need to be spending. Now is the time to invest in infrastructure, in buildings, roads, you-name-it that will have long term value and also act as a short term stimulus.
It is sadly ironic that back in early 2008 Bush refused to do infrastructure spending as a stimulus. His argument was that it would be too slow in ramping up. So he went for a quick tax cut to put money in the public's hands. That had a short quick stimulus effect, but nothing long term. Economists say that the US was in recession from November 2007, but the real collapse came late in the Fall of 2008. If Bush had done a serious stimulus program spending money on infrastructure, that would have kicked in and provided real support in 2009. But, of course, Bush didn't do that because that was beyond his presidency, and he never believed in serious stimulus. He was always a "tax cut" guy. Tragic.
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