'Going Galt' Got Going Last Summer
My Pajamas Media column last week hasn't generated a lot of leftist love.
In it, I had the unmitigated gall to note that the federal government has collected far less in tax receipts during this fiscal year compared to last year than an economic contraction of less than 1.75% would seem to predict (not annualized, the economy contracted 0.125% in the third quarter of 2008 and 1.61% in the fourth).
I also "sinned" further by suggesting that the "going Galt" phenomenon has contributed to the shortfall.
That suggestion has plenty of support beyond "mere" anecdotes cited by ABC and those recited by several Pajamas Media commenters during the past few months.
April 2008 saw an all-time record for federal tax collections of over $400 billion, largely buoyed by final 2007 tax payments and first-quarter 2008 estimated tax remittances from business owners, investors, and entrepreneurs who pay taxes as individuals. It was a performance I characterized at the time as a "supply-side stunner," because it showed, five years on, that George Bush's investment-related tax cuts of 2003 still had growth-generating legs.
The collections record occurred as the economy was in the midst of recovery after a difficult fourth quarter of 2007. First-quarter growth was a tepid 0.9%, but the second quarter's 2.8% was just short of the 1958-2007 median of 3.1%. The real (i.e., not seasonally adjusted) economy added jobs, though not as many as in previous years, from February through June.
Thus, we were not in a recession as normal people define it -- not numerically and not mentally. As I wrote at the time of the high producers who were generating so much cash for Uncle Sam: "many ... are thinking, in the face of relentless media harping to the contrary, that 2008 will be at least as profitable [as 2007]."
But a short time later, receipts began tailing off and went comparatively negative:
What triggered the sudden shift? It was the beginning of the POR (Pelosi-Obama-Reid) economy in mid to late June.