GDP for the first quarter recently came in at a very disappointing rate and barely positive. I am a great believer in the theory that too much government involvement hurts, rather than helps, our economy. Here are some comments from a report I read today that might be of interest..
Overall government transfers to persons were up 0.3% in March and are up 3.6% in the past year, largely driven by the Obamacare-related expansion of Medicaid. Before the Panic of 2008, government transfers – Medicare, Medicaid, Social Security, disability, welfare, food stamps, and unemployment comp – were roughly 14% of income. In early 2010, they peaked at 18.5%. Now they’re around 17%, but not falling any further. Redistribution hurts growth because it shifts resources away from productive ventures and, among those getting the transfers, weakens the incentive to produce. On the inflation front, the PCE deflator, the Fed’s favorite measure, increased