Thursday, September 19, 2013

GOP Backed Spending Cuts Cause Drop in Virginia’s Median Household Income

To listen to demagogues of the Republican Party, tax cuts for the wealthy and government spending cuts are supposed to magically spur the economy.  This false vision, of course, ignores the fact that when government spending cuts kick in, this means fewer goods are purchased and even more significantly, government employees are fired or laid off and their purchasing power and family income is decimated.  Especially in an economy where jobs are scare and wages are falling.  Of the 50 states, Virginia is particularly vulnerable to the impact of GOP backed government spending cuts.  And new data shows that Virginia's median household income has fallen thanks to the GOP's distorted voodoo economics.  Here are highlights from the Washington Post:

Virginia’s median household income fell more than 2 percent last year, the most significant drop in the country at a time when most states saw their incomes go flat, according to Census Bureau figures.

Several economists said the declining figure is the result of budget cutting in Washington that rippled across the state even before the sequestration-mandated cuts took effect this year.

The median income for Virginia households fell in a single year by $1,400, to less than $62,000, the Census Bureau said. Adjusting for inflation, that is almost $1,000 less than it was in 2000.

Median household income is considered a broad measure of economic well-being, and Virginia’s loss stood out in a year in which, according to the Census Bureau, incomes and poverty rates finally leveled off after four straight years of decline during the recession and an uneven recovery.

A Washington Post analysis of census data by county shows that almost every region in Virginia experienced a decline in that critical yardstick. In every county in Northern Virginia, the median income slipped, just as it did in most counties and cities around Hampton Roads and the areas around Richmond and Roanoke.

In contrast, the median household income plateaued in Maryland, which has the highest median figure in the country. It rose in the District and in Montgomery County
The federal government spends about $17,000 in Virginia for every resident in the state, one of the highest per capita levels in the country and almost double the national average. About one in 10 state workers is employed by the federal government.

“Virginia is very vulnerable to cuts in federal spending because roughly a third of its economy is tied to the federal government,”
[I]ndicators suggest that Virginia’s economy has been struggling, especially in contracting. The state’s economy grew by 1.1 percent in 2012, less than half the rate of such neighbors as Maryland and North Carolina.

“A lot of large organizations are having to cut their overhead,” he said. “It means folks are losing positions. It’s been a progressive annual decline — 2012 was worse than 2011.”

Many people who have lost jobs are support staff — such as maintenance employees — whose work cannot be billed directly to the government, Antonelli said. Often, the cuts have led to less work for subcontractors, he added.

There is more in the article.  The lesson: when you see some moron driving around with a Tea Party license plate, remember that they are part of the problem and are fueling Virginia's economic decline.  And if a government shut down does occur, things will only get worse.

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