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Givers and Takers

Givers and Takers

In the relationship between our federal government and the individuals it represents, there are two groups: the givers and the takers.   In the upcoming year, 3.1 million Hispanic-owned businesses will create more than $468 billion of wealth and add countless jobs to the U.S. economy according to a 2013 briefing by Geoscape.  These entrepreneurs and their employees are part of the workforce that makes up the “givers.”  Using available resources and their talents, ambitions, risk-taking, and hard work, these members of the Hispanic community in the private sector will create products that are valuable to our society.  As a group, migrants are more entrepreneurial than their native-born counterparts.  According to a recent Gallup report, first-generation migrants are more likely to start a business within the next year, take business-related risks, feel optimistic even when things go wrong, and exhibit more of a “never give up” attitude.

On the other hand, there is “big government.”  The public sector by definition runs on taxpayer dollars from the private sector.  There is no “product” for the government to create and then sell for profit; it relies on the private sector to function.  Ideally, the amount of taxes collected would be just enough to run a limited government that protects its citizens from violence and secures individual freedom.  Unfortunately, Washington has strayed from this ideal; our public sector is so addicted to spending on pet projects, failed social programs, and special interests that it has become a group of burdensome “takers.” As an example of how far we’ve come, the President recently celebrated the fact that this year’s deficit – the amount that government spending exceeds what it takes in – is smaller than in years past.  What was not highlighted was that we are still overspending by $1.1 trillion in 2012 alone.  This modest reduction in the deficit is not because the government is spending less, but rather because it is taking more.   And the private sector is feeling the effects.

Virginia – home to about 630,000 Hispanics — saw median household income fall more than 2 percent last year alone, representing the most significant drop in the country. This concerning pattern holds true for the other states with high Hispanic population:

State 2012 Median household income 2000-2012 income change
Arizona $47,826 -6.9%
California $58,328 -6.1%
Colorado $56,765 -8.1%
Florida $45,040 -11.2%
Nevada $49,760 -11.9%
New Mexico $42,558 -4.8%
Texas $50,740 -3.1%
Virginia $61,741 -1.7%


Chances are you’re making less than you were last year, as only four states and the District of Columbia saw real income increases between 2000 and 2012 according to Census date.  The income of the typical D.C. household rose 23.3% between 2000 and 2012 to an inflation-adjusted $66,583, according to the Census Bureau’s American Community Survey.  If the area is extended to include the entire D.C. metro area, the household income jumps to $88,233, an increase of over $20,000 per year. During this same time period, median household incomes for the nation as a whole dropped 6.6% — from $55,030 to $51,371.  Why, at a time when small business owners and the middle class are struggling to overcome onerous taxes, would the nation’s capital enjoy a boom?   Congress and the White House continue to support an influx of federal contractors, lawyers, consultants, and lobbyists that work with and for the public sector who are enjoying an increased standard of living at the expense of the “givers.”

The figure of a nearly $17 trillion national debt gets thrown around a lot, but it really is important to understand what that means. A study from the International Monetary Fund finds that high-debt economies grew at 1.3 percentage points slower than low-debt countries, and a corresponding analysis from The Heritage Foundation shows that over a decade this type of slowdown means serious money: $11,000 or more in additional wealth each year per family.  For years since the recession hit, middle-class America has had to find ways to cut back, while Washington refuses to do the same.  From vacations to groceries, home improvements, and beyond, since 2009 it has been an exercise of balancing what families can and cannot do without.  Now, with median household incomes declining (except, of course, in Washington D.C) we need to ask: How long will the givers in our economy be able to sustain the takers’ spending habits?