The short form is that more people are getting more of their income by the use of government force to take it from others.
Not a good situation. Supposedly, Margaret Thatcher said "They (socialists) alwasy run out of other people's money."
That is certainly true. If most of the sources of income involve taking from others pretty soon there isn't enough to go around. I thought that was obvious, but there are always people who don't get the word. Usually those people are elected to congress or they sit in the White House.
From the article:
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.
Those records reflect a long-term trend accelerated by the recession and thefederal stimulus program to counteract the downturn. The result is a major shift in the source of personal income from private wages to government programs.
I suggest that you go back and read that again. If it doesn't scare you then you probably should check yourself into the Betty Ford Clinic.
Here is a simple explanation from the article:
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.
Some numbers from the article:
I'm too lazy to look it up now but I wonder what is the source of the other ~40% of personal income. So-called "un-earned income" from interest and speculation? I say so-called un-earned because I don't think interest is really un-earned, at least not like welfare is un-earned.
• Private wages. A record-low 41.9% of the nation's personal income came from private wages and salaries in the first quarter, down from 44.6% when the recession began in December 2007.•Government benefits. Individuals got 17.9% of their income from government programs in the first quarter, up from 14.2% when the recession started.
One more bit:
Economist Veronique de Rugy of the free-market Mercatus Center at George Mason University says the riots in Greece over cutting benefits to close a huge budget deficit are a warning about unsustainable income programs.There is that place again - Greece.
The economic pain these days is a symptom of the problem of spending money you don't have, from individuals up to the federal government. Like most medical problems, if you try to avoid pain by putting off going to the doctor for treatment then most likely you will suffer much more in the end.
The government may be able to put off some of the pain by taking from some people and giving it to others but in the end we will face more pain. Far better for the federal government to make deep spending cuts now and start paying back some of this debt then to keep piling on more debt in hopes that it will somehow go away or be forgiven.