
Originally Posted by
Melonie
^^^ several points of response ...
Regarding the creation of new jobs, there is a world of difference between the private sector economy creating a new job which creates additional 'real wealth' and contributes additional 'real tax revenue', and the creation of a public sector job ( or gov't funded job within the private sector) which does NOT create additional 'real wealth' and which consumes 'real tax revenue' rather than providing it. This was part of Mr Liu's article series i.e. that foreign lenders fully realize the new 'equation' re the major and permanent loss of US private sector jobs and their partial replacement with gov't funded jobs, and the resulting future impact on America's ability to repay its Treasury Bond debts to those foreign lenders.
In simplest terms, the percentage of gov't funded unemployment plus gov't funded employment cannot exceed a certain percentage versus total private sector employment or the parasitic effect of gov't tax revenue needs overwhelms the private sector thus the US economy as a whole. Arguably, America crossed that maximum percentage late last year, and the trend is getting worse. And non-arguably, those sectors of the US economy in which the Obama plan is adding jobs are virtually ALL government funded i.e. government employees, government contractors, predominantly gov't funded health care workers, gov't grant based green energy startups etc. While such jobs obviously are of 'value' to the people being hired, in point of fact every such job added increases the 'real tax revenue' burden on private sector businesses and workers ... either now or in the near future.
As to buyers being made into sellers, this is true for both individuals and governments ! But gov't faces the Margaret Thatcher barrier ... 'sooner or later you run out of other people's money'. And both face a limit imposed by lenders ... i.e. at some point the lenders stop lending because their fear ( of non-repayment in terms of real purchasing power dollars ) exceeds their greed. This in turn forces the 'rejected' borrower ( individual or gov't ) to either reduce their spending levels to match their actual revenues, or to resort to 'crime' to increase their revenues. Of course, governments have a number of options available to increase their revenues without 'working for' the extra money ... but when done by a government it's called a tax increase or currency inflation rather than a 'crime'.
As to your comment about the former $75,000 per year middle class being rapidly devastated, this is obviously already happening. But it is also about to get worse ... MUCH worse ... because those $75,000 middle class Americans who are still employed will soon be facing significantly higher tax rates ( both federal by expiry of the Bush tax cuts and AMT patch, and at the state and local level) as well as significantly higher prices ( for oil / food / durable goods due to a declining US dollar, due to new tariffs imposed on low cost Chinese imported products, etc.).
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