Paychecks from private business shrank to their smallest share of personal income in U.S. history during the first quarter of this year, a USA TODAY analysis of government data finds.At the same time, government-provided benefits — from Social Security, unemployment insurance, food stamps and other programs — rose to a record high during the first three months of 2010.
There is no surer way to bankrupt a country then by spending more money on government benefits while personal income declines. Or, as an economist in the article points out:
The trend is not sustainable, says University of Michigan economist Donald Grimes. Reason: The federal government depends on private wages to generate income taxes to pay for its ever-more-expensive programs. Government-generated income is taxed at lower rates or not at all, he says. "This is really important," Grimes says.
Grimes is completely correct. As private income goes down, there is less money to fuel government programs. As government programs increase, it becomes harder to get rid of them. Once government programs swallow up more of the GDP, it simply becomes unsustainable.
