Tags: income | obama | personal | drops | 3.2 | percent | taxes

Personal Income Drops 3.2 Percent Under Obama

By Dan Weil   |   Tuesday, 13 Apr 2010 10:08 AM

Americans’ real personal income, excluding government benefits, has slumped 3.2 percent since January 2009, when President Barack Obama took office.

That’s according to the Commerce Department's Bureau of Economic Analysis, as reported by The Washington Times.

During the first 15 months of President George W. Bush’s tenure, real personal income dipped only 0.4 percent.

To be sure Bush, inherited a much milder recession from his predecessor than Obama did.

But economist Douglas Holtz-Eakin, former director of the Congressional Budget Office, told The Times that the recent drop isn’t surprising.

"Under President Obama, only federal spending is going up. Jobs, business startups, and incomes are all down. It is proof that the government can't spend its way to prosperity."

Per capita income fell more in the nation’s two biggest states, California and New York, than in the country as a whole. Californians income slipped 3.5 percent to $42,325, while New Yorkers lost 3.8 percent to $46,957.

"The evidence from New York and California reinforces a basic lesson: where government gets too large, prosperity suffers,” said Holtz-Eakin, who was chief economic adviser to John McCain during the presidential campaign.

“Let's hope that the Congress learns this lesson before it is too late for the country as a whole."

Ironically, personal spending is rising despite the slide in income.

"Overall, real consumer spending is on track to rise just above 3 percent [annualized] in the first quarter, which would be the strongest increase in three years and much better than the fourth quarter's 1.6 percent," economist Nigel Gault of IHS Global Insight wrote in a report obtained by The Christian Science Monitor.

Spending "is being helped by a stabilizing labor market and, temporarily, by around $20 billion in refundable 'Making Work Pay' tax credits being paid out as workers file their 2009 tax returns," he said.

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