Maine’s Private Sector Shrinking Rapidly in 2009
In my previous blog, I noted that in 2008 Maine’s private sector share of personal income set a new all-time record low. Unfortunately, it appears that the 2008 record will soon be shattered in 2009.
In the 2nd quarter of 2009, Maine’s private share of personal income plummeted to 62.9 percent–down from 64.4 percent in the 1st quarter of 2009 (click “continue reading” to view chart).
However, it’s not just Maine’s private sector that has been shrinking but the whole country’s. Of course, that points to the culprit–the Bush and Obama federal stimulus packages. The stimulus can be seen in its effect on personal current transfer receipts which has grown tremendously–$9.998 billion in the 4th quarter of 2008 to $10.398 in the 1st quarter of 2009 and to $11.127 in the 2nd quarter of 2009.
Whatever the merits of the stimulus package, they must be counter-balanced by the severe crowding-out of the private sector. Hopefully, this crowding-out is temporary but that hinges on whether or not states decide to pick-up where the stimulus leaves off. This data strongly suggests that the best course of action is to let the stimulus lapse and let the private sector rebound.
Unfortunately, the track-record for Maine politicians suggests that they will try to make many aspects of the federal stimulus package permanent to the detriment of Maine’s private sector. Therefore, it is all the more important for Maine to have a Taxpayer Bill of Rights in place to prevent the further erosion of Maine’s private sector post-stimulus.