Uncle Sam is good to Maryland, buying more than $20 billion a year in goods and services and employing almost 126,000 workers earning $9.4 billion. State and local governments add more than 300,000 workers who make almost $14 billion. State and local governments add billions more in procurement. That is wonderful in one sense, but government billions must not blind us to the need to nurture private-sector enterprises that actually generate the wealth for governments to tax.
Government can be wonderful. It can, at its best, enable much. But it produces nothing. What government does do is take money from people who produce wealth and spread it around.
Manufacturing, agriculture, fisheries, mining and information are the only enterprises that actually create wealth. We must make sure Maryland is doing enough to enhance those.
Our state benefits from almost 6.5 percent of total federal spending and gets $3,637 per child, woman and man. Maryland received the fourth-highest total allotment in the nation and the third-highest per capita in 2004.
The state?s receipts outpace others in Social Security retirement benefits, too. Maryland?s average monthly benefit for its nearly 800,000 retired workers is $962, but the national average monthly benefit for retired workers is $955, according to the 2004 State Statistics from the U.S. Social Security Administration. So long as there are enough people working in the private sector to support retirees and government employees, we won?t have major problems. But demographics are changing.
In a recent paper for the Federal Reserve Bank of St. Louis, Laurence Kotlikoff, of Boston University, writes that the estimated $65.9 trillion needed in health care and pension benefits for the swell of retirees “is more than five times U.S. GDP and almost twice the size of national wealth. One way to wrap one?s head around $65.9 trillion is to ask what fiscal adjustments are needed to eliminate this red hole.”
One obvious answer is to cut spending wherever possible.
That means that our favored status could kick us in the head down the road when shifting demographics pressure all levels of government to trim their payrolls and buying.
In states like ours where the economy is highly dependent on the wages and salaries and pensions of those who work or who have worked for “we the people” in federal, state, county and local government, cuts would dramatically affect the economy, especially if we have gotten lazy and let private-sector development slide.
Total government wages for the state were more than $23 billion in 2005, compared to $111 billion for all industries. And government workers comprise 18 percent of the work force. Federal government wages account for $9.4 billion of that $23 billion in government-sector wages.
Government jobs aresome of the most highly paid in the state, but we must not count on them for long-term economic growth. For the well-being of Maryland?s 5.6 million residents, our elected officials and civic and business leaders must search for better ways to build the private sector, not just lure more public dollars.
