Tuesday, November 03, 2009
Real Men Don't Puke
But you can't puke from looking at stats like these:
Montly Treasury Statement Data: Page 5: Social/RetirementBEA Quarterly: Wage and Salary disbursements.
2008 September: 71,307
2009 September: 68,212 (-4.3%)
Hospital Insurance Fund:
FICA 2008 September: 15,110
FICA 2009 September: 14,377 (-4.85%)
Self 2008 September: 5,099
Self 2009 September: 2,159 (-57.7%)
Total 2008 September: 20,209
Total 2009 September: 16,536 (-18.2%)
Income taxes withheld were down 18.6%
FICA 2008 August: 14,244
FICA 2009 August: 13,569 (-4.7%)
Income taxes withheld were down 11.8%
FICA 2008 July: 14,186
FICA 2009 July: 13,714 (-3.3%)
Income taxes withheld were down 12.8%
Q3 08: 6,567.7 Q3 09: 6,226.4 (-5.2%)Daily Treasury Statements October:
2009 October (30th)Fortunately, I am a woman so I am allowed to puke. I am not sure that our fearless congressional weasels are grasping the fact that raising taxes is going to have some sharply diminishing returns approaching the negative.
WIET: 124,731 (plus 3-4K?)
FUT 249 (has to be entered from tonight's) ** FUT 249 + 298 = 547
2008 October (31st)
2007 October (31st)
FUT: 714 (509 on last day)
2006 October (31st)
2005 October (31st)
Also, shifting more and more of the total tax burden to the wealthy is creating very volatile tax receipts:
Those high income people (Singles >.5 mil) get a disproportionate share of their income from businesses, investment income and sales of assets. We can see why the government would want to create asset bubbles, but it is not clear that asset bubbles in fact do create benefits in the long run. They seem to be creating debt and lower incomes in the long run.
The figures above for hospital insurance, which is a flat 2.9% of every dollar of payroll no matter how low or how high the wage, can be used to impute wage drops. So YoY total wages and salaries were down well over 4.5% in September, and are continuing well down in October. We are not entering the zone of YoY comparisons to the cliff-falling stage in 2008, so one is hoping to come up with some stability somewhere soon.
Some taxes are pretty much fixed, which implies that net tax burdens per capita are often rising (including state and local taxes such as property tax).
Nominal wages do not normally drop in recessions; regardless of whatever we may call it, this one has some mechanics that are more like a depression than a recession. NIPA tables can be found here.
In this context, you might want to read this Volokh discussion on the high benefit/high tax state (CA/TX models). There are two important points. First, in many ways Texas is delivering better on standards such as education. Second, a lot of the tax burden in CA has been shifted into incomes and retirement for public employees rather than services - look at this BEA graph, and notice the different curves for public/private wages:
So the diversion is happening in society at large, not just CA.
Quoting from the article:
What is surprising is the growing evidence that the low-benefit, low-tax alternative succeeds not only on its own terms but also according to the criteria used by defenders of high benefits and high taxes. Whatever theoretical claims are made for imposing high taxes to provide generous government benefits, the practical reality is that these public goods are, increasingly, neither public nor good: their beneficiaries are mostly the service providers themselves, and their quality is poor.But I wonder if the California/Texas comparison isn't addressing a US-wide problem. When I was kid public employees had much better job security, considerably better benefits and lower wages. Now they have MUCH better job security, MUCH better benefits and higher wages. I suspect that the current downturn will produce a paradigm shift due to necessity.
Show me the money? Bah! Show me the private income.
Forget the month over month and even yoy comparisons too. This train wreck goes back many years. Consider. Personal income less government transfers is at the same level as Q2, 2005! And the stats would be worse if we excluded the personal income growth attributable to the government.
Our economy has been gutted and looted. At this point, the government IS our eCONomy.
Any talk of limiting government spending or deficits is just pretense to maintain the delusion of "free" market capitalsim. The free market boat was hijacked by pirates a long time ago. We now have a government sponsored eCONomy that rewards financial looting and unduly burdens productive endeavors with excessive regulations, taxes, fees, and a bloated legal system. Only dingbats like Sean Hannity still believe in the free market exists.
The winners in the new (e)CONomy are those that work for the gubbmint, those that are big enough to write the laws through lobbyists and those with access to the treasury and fed.
Am I wrong?
YT is going to drink beer through a funnel until he projectile vomits. Way better than picturing what 2019 will look like.
The quarterly self-employment numbers were pretty excruciating!
YT - word has it that is what is going on at the White House tonight.
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