Today the average American finally pays off the burden of government. It only took 192 days. According to a new report from Americans for Tax Reform (ATR), government effectively consumes 52.6 percent of national income.
Unfortunately, the Bush years have not been good ones for Americans tired of turning so much of their incomes over to government. Despite the Bush tax cuts, people are working several days longer for federal, state, and local governments now than in 2000, when George W. Bush was elected president. Cost of Government Day (COGD) rose two days from 2006 alone.
There have been tiny declines along the way, from 2003 to 2004 and 2005 to 2006. But, notes study author Elizabeth Karasmeighan, “the drop in the cost of government was short lived.”
The problem is largely one of spending. Writes Karasmeighan: “The average American worker will have to work an additional 6 days out of the year over 2000 to pay for government spending on all levels. Federal spending continues to be the main driver of the Cost of Government index, adding 6 days on to the days Americans were forced to work for federal government spending in 2000.” From 2006 to 2007 federal spending upped the financial burden on taxpayers by a half day.p>Sadly, the years of Republican governance have erased much of the gain from nearly a decade of divided government between President Bill Clinton and the GOP Congress. Karasmeighan explains: br> /p>
The elevated levels [of] federal spending over the past seven years have wiped out 37 percent of the unprecedented reduction in the burden of federal spending as a percentage of national income from 1993-2000. Federal spending (as a percentage of income) declined for eight straight years, which reduced government spending from one out of every four dollars of national income to one out of every five dollars. By 2000, average Americans worked 14.3 days less of the year to pay off their federal spending burden than in 1992. In just the past six years, however, 37 percent of that gain has been eliminated.br> Outlandish outlays, not tax cuts, are responsible for today’s deficits. Karasmeighan points out that 70 percent of the cumulative deficit since 2002 resulted because spending rose more quickly than national income. A simple “spend only what you can afford to pay policy” would have largely eliminated the deficit.
The future looks even uglier. The 78 million baby-boomers begin to retire next year, and will ultimately generate a financial tsunami through Social Security and Medicare. With Congress lacking the slightest political backbone, so necessary to tackle entitlement reform, the U.S. will have to find a way to cover tens of trillions of dollars of unfunded liabilities under even the most favorable economic circumstances.
State and local spending accounts for another 1.6 days of the COGD increase from 2000 to 2007. This year the average American will work nearly 46 days to fund state and local governments. Moreover, the future likely will be worse. Reports ATR: “Even with looming unfunded pension and health care liabilities, states are failing to reform their entitlement programs. On the contrary, many states used their 2007 sessions to discuss expanding health care programs and imposing health insurance mandates.”p>The regulatory burden also is growing, despite roughly six years of a supposedly free market Republican president and Congress acting in tandem. Reports ATR: br> /p>
The cost of regulation as a percent of national income remains at 16.9 percent for the fourth year. It is important to note, however, that revised data on regulatory costs reveal that COGD reports prior to 2006 were underestimating the cost of regulations. New regulations imposed following the War on Terrorism and corporate scandals significantly increased the regulatory burden in 2001 and 2002 in particular. Concurrently, the cost of tax compliance continues to grow. In 2007, the average American will work 61.8 days to pay for the regulatory costs, nearly 1 full day more than was required in 2006.
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