The American Spectator

Special Report

(Page 2 of 3)

br> /p>

This is not just a one-year phenomenon. Total federal spending has skyrocketed 45 percent since President George W. Bush took office in 2001. Adjusted for inflation, spending has jumped by 27 percent in just five years--more than twice as much as real spending grew during the eight years of the Clinton Administration. Measured on an annual basis, inflation-adjusted spending during the Bush years has increased more than three tines as fast as it did during the Clinton years. Indeed, spending as a percentage of GDP has grown more under George W. Bush than it has under any other President since Franklin D. Roosevelt.

br> The rise in outlays has been spurred in part by the increase in programs. Chris Edwards of the Cato Institute points out that there are now 1696 federal subsidy programs. That's a 44 percent jump since 1990. The number has risen by 271, or one-fifth, since President Bush was elected.

The federal government, in particular, is a huge wealth redistribution machine. Andrew Chamberlain, Gerald Prante, and Scott A. Hodge of the Tax Foundation figure that in 2004 government redistributed between $1.03 trillion and $1.53 trillion to people in the three lowest income quintiles. That's as much as 44 percent of total government outlays. Unfortunately, what Uncle Sam is best at is not preserving our lives, wealth, and liberties, but in robbing Peter to pay Paul, plus a few government employees along the way.

The rich pay the most in taxes, of course. Those in the top quintile account for almost half of all taxes, 48.8 percent. Members of the second quintile pay 22.4 percent of the total. The center bracket covers 14.8 percent. The bottom two pay 9.6 percent and 4.3 percent, respectively.

Federal taxes are a bit more progressive, hitting the wealthiest taxpayers the most. The ratio of taxes paid by top to bottom quintiles is over 20 to one. For state taxes the disparity is "just" 5.5 to one. Top earners pay more of every levy other than tobacco taxes.

There has been little change in the distribution of the tax burden over time. The wealthy (constituting the top quintile) paid a little bit more, 50.6 percent, in 2000 compared to 48.8 percent in 2004. They paid a little less, 46.4 percent, in 1991. Despite a roller coaster of tax hikes and cuts under Presidents Bill Clinton and George W. Bush, respectively, the share paid by top earners has remained relatively consistent.

Those in the bottom quintile pay the least in taxes but receive the most tax dollars in return. They collect an estimated $8.21 in "benefits" for every dollar they pay in taxes. Those in the middle quintile, with incomes between $23,700 and $42,305, get $1.30 back for every dollar paid. The rich receive 41 cents.

OBVIOUSLY, SOME OF THOSE GOVERNMENT payments are for "public goods," such as the court system and defense. It's not easy to apportion federal spending, but the Tax Foundation counts this 26.2 percent of outlays as serving everyone. Never mind that many of these programs don't benefit the public and, in some cases, actually hurt those they are supposed to help.

The Tax Foundation figures another 32 percent of outlays as "private or quasi-private goods," which "could theoretically be allocated to households based on utilization rates, but for which there is little data available to do so." Roads, parks, schools, and libraries are obvious examples. In most of these cases the benefits are primarily private and changing technology makes it ever easier to charge for such goods and services, many of which were long thought to be "public," such as roads. However, politics mitigates against even the most modest cuts in these benefits.

The final 41.8 percent of the budget is transfer payments-- shifting vast amounts of money around from economic producers to tax consumers. There's Social Security, Medicare and Medicaid, as well as a host of housing, health care, and social service programs. Since Congress hopes to win votes by adding new programs irrespective of public need, there is an endless array of transfer programs that cover almost every area of life.

The Tax Foundation figures that low-income people get the most in total government spending ($35,510 for every low income household) and government outlays minus public goods ($27,361). Benefits received successively fell for members of the 2nd through 4th quintiles but then, ironically, jumped for the highest earners.

Still, as a percentage of household income, government outlays are very progressive. Total expenditures and total expenditures other than public goods ran 106.4 percent and 82 percent, respectively, for the poorest Americans, 58.4 percent and 42.5 percent for the second quintile, 36.8 percent and 26 percent for the middle group, 24.1 percent and 16.9 percent for the next quintile, and 14.1 percent and 10.7 percent for the top earners. As government spending has risen in recent years, the share of government outlays going to the top quintile has fallen sharply, making the overall system even more progressive.

If taxpayers were getting good value for their money, government's massive redistribution machine might not seem quite so obscene. But the Uncle Sam provides nearly $100 billion in corporate welfare to well-heeled businesses. The biggest social programs, Social Security and Medicare, are racing towards financial catastrophe.

topics:
Taxes, Transportation, Health Care, Bill Clinton, Business, Social Security, Medicaid, Energy, Alaska, Medicare