Thu, Sep 18, 2014 ●
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Short Relief: Income growth flap disguises ideology gap

Opinion

Short Relief: Income growth flap disguises ideology gap

You know me. When I am not sitting around the house reading Wikipedia, I am calculating the value of pi to the nth digit. On a nice sunny Sunday morning, there is nothing I would rather do than parse through the Department of Commerce’s Bureau of Economic Analysis’ data on state personal income and employment and play with its interactive tables.

The bureau’s data shows that between the fourth quarter of 2013 and the first quarter of 2014, national personal income grew about $108 billion dollars, from $14.301 trillion to $14.409 trillion (all my numbers are approximates). Personal income grew in 46 states. It increased 0.8 percent on average.

Vermont was one of three states to experience the fastest growth, 1.4 percent. Its personal income increased $410 million from $29.047 billion to $29.458 billion. One factor may be that it has the lowest unemployment rate in New England and the fourth lowest in the country (3.7 percent in February). About half of its income growth was growth in earnings.

The Bureau defines personal income as income from all sources, including earnings, returns on investments like rent, dividends and interest, and personal current transfer receipts.

Maine’s personal income grew $270 million, from $55.27 billion to $55.54 billion, for a rate of 0.5 percent, which meant that it ranked 39th among the states. Critics of Gov. Paul LePage noted that was last in New England (the other four besides Vermont experienced growth rates of 0.8 percent and 0.9 percent) and described Maine as lagging and sluggish.

Of Maine’s $55.5 billion quarterly personal income, $36.5 billion was earnings (meaning wages and salaries and supplements, such as employer contributions for pensions and insurance). That was up from $36.2 billion in the last quarter of 2013. Maine’s net earnings (earnings minus contributions for government social insurance) were $33.4 billion, up from about 33.1 billion. Wages and salaries (remuneration before deductions) were $25.5 billion, up from $25.2 billion, or 1.2 percent. Transfer receipts were $12.3 billion, which was about even with the previous quarter.

Transfer receipts are defined as government social benefits, more specifically Social Security retirement and disability benefits, Medicare, Medicaid, income maintenance, unemployment insurance, veterans benefits, student aid, and other unspecified benefits.

Nationally, transfer receipts increased $40 billion, from $2.46 trillion to $2.5 trillion. The bureau noted that increase reflected several special factors, including $15.5 billion for a cost-of-living adjustment in Social Security benefits, and $22.3 billion for expanding Medicaid benefits pursuant to the Affordable Care Act. Many estimate that Maine gave up $300 million a year, or $75 million a quarter, because the governor opted out of Medicaid expansion. That represents about 0.14 percentage points in quarterly growth.

In one sense, these receipts are transferred from one government to another. Ultimately, they are transferred from some people to other people. If funded by current revenue, they are redistributed from current taxpayers. If funded by borrowing, they are transferred from future taxpayers.

Like most governments these days, Maine state government spends more than it takes in. The difference is made up by borrowing and government-to-government transfers. Several organizations rate us among the states most dependent on federal transfers, for years. By one measure, Maine got back from the federal government $1.59 for every dollar we paid in taxes in 2013, down from $1.79 in 2012.

I wish it were otherwise, because I believe that individually and collectively, people are happier, healthier, and better off the more that they provide for themselves.

That is not to suggest that everyone should live by themselves on a pond in the woods, or to pretend that I don’t look at my own Social Security statement and hope to receive the benefits promised there. I am not denying that people need people, or that government is necessary. Just that helping other people works better when it is done closer to home. Government is a poor substitute for a functional family and a paying job.

Happiness comes from within. You know better than anyone what makes you happy. Ultimately, you can’t rely on other people to make you happy. Things that you earn are more satisfying than things that you are given.

In the great divide between those who think that people on government assistance could do more to help themselves and those who think that they can’t because of circumstances beyond their control, I lean to the side of expecting them to take more responsibility. Because I prefer to believe in human potential, the power of free will, and the benefits of individual self-determination.