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Restrain the Abusive Administative State
May 22, 2013 | 24 comments
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Delivering Serbs to the Wolves
May 21, 2013 | 29 comments
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The Perils of Intervention in Syria
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America on Welfare
April 25, 2013 | 46 comments
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Thursday Is Tax Freedom Day
April 17, 2013 | 5 comments
Special Report
Tax Freedom Day – Not
Nominally it falls tomorrow. But to cover just this year’s federal spending, taxpayers would have to turn all their earnings over through May 23.
(Page 2 of 2)
The Tax Foundation, which estimates Tax Freedom Day, acknowledges the problem. Since 2008, observes the Foundation, “deficits have been massive by any measure, and as a result, Tax Freedom Day may give the impression that the burden of government is smaller than it is. If the federal government were planning to collect enough in taxes during 2011 to finance all of its spending, it would have to collect about $1.48 trillion more, and Tax Freedom Day would arrive on May 23 instead of April 12.”
That revised TFD would set a peacetime record. You have to go back to World War II to find a time when the U.S. government spent a larger proportion of the economy. And World War II was the greatest conflict in human history. A little “kinetic military action” in Libya for who knows what purpose doesn’t come close.
Unfortunately, there is little reason for optimism about the future. The congressional Republicans originally proposed to cut $61 billion from this year’s expenditures, about 1.6 percent. Now they’ve settled for $22.5 billion less.
House Budget Committee Chairman Paul Ryan has offered a thoughtful long-term plan that would make major reductions in entitlements as well as discretionary spending. But its political future is, to put it kindly, uncertain. It won’t go anywhere with a Democratic Senate and president. It might not go anywhere even if the Republicans win control of both ends of Pennsylvania Avenue next year.
The current budget numbers look frightening enough. But more spending is inevitable. Fannie Mae and Freddie Mac continue to lose money. The Federal Housing Administration is insuring more problem mortgages than ever. The FDIC continues to close banks. The Pension Benefit Guaranty Corporation continues to take over the pension plans of failed businesses. All of these and many other bills will eventually come due.
The Obama administration has got America into its third unnecessary Middle Eastern war in a decade. With military forces still occupying Iraq eight years later and still fighting in Afghanistan nearly ten years later, who knows how long the U.S. will be stuck fighting, occupying, and reconstructing Libya. War is just another Big Government program with an equally large unfunded liability.
Then there’s Obamacare, assuming it is not repealed by Congress or overturned by the Supreme Court. By one estimate the legislation imposed an unfunded liability of over $13 trillion. No one knows for sure, since the official estimates were fudged by Congress. Permanent, non-political officials at the Centers for Medicare and Medicaid Services have repeatedly said, ever so politely, that the Democrats lied about the numbers. The Medicare cuts that were necessary to fund the program simply aren’t going to happen: they are “very unlikely to be viable indefinitely,” under the new reimbursement rates providers “would eventually be unwilling or unable to treat Medicare beneficiaries,” and projections based on these changes “are very likely to seriously understate actual Medicare costs in the long-range future.”
Finally, there are the unfunded liabilities for Social Security, Medicare, and Medicaid. The federal government only develops an estimate for the first two, and their combined future red ink came to $107 trillion in 2009, the last reliable estimate. Medicaid is on a similar trajectory. Left unchanged, these three programs alone will eventually destroy federal finances. Yet even many avid members of the Tea Party don’t want to touch what they see as “their” benefit programs.
The fiscal train wreck is approaching. “The federal budget is on an unsustainable path, because federal debt will continue to grow much faster than the economy over the long-run,” warned the CBO. Looking ahead just a decade, the agency reported: “To keep annual deficits and total federal debt from reaching levels that would substantially harm the economy, lawmakers would have to increase revenues significantly as a percentage of GDP, decrease projected spending sharply, or enact some combination of the two.”
Indeed, after the coming tsunami of spending, deficits, and debt, one hates to imagine the date of future Tax Freedom Days. Will there even be a tax freedom day? Maybe taxpayers will face the ultimate simplified tax form of just two lines: “1) How much did you earn? 2) Send it in.”
With the president and Congress attempting to provide a full service global welfare state, the IRS is likely to become a little like the Eagles’ Hotel California, where you can check out but never leave. You will be able to earn money, but never spend it. After all, everything you own was long ago promised by Uncle Sam to someone else.
About the Author
Doug Bandow is a senior fellow at the Cato Institute. A former Special Assistant to President Ronald Reagan, he is the author and editor of several books, including The Politics of Plunder: Misgovernment in Washington (Transaction).
Letter to the Editor View all comments (14) | Leave a comment
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Intelligent Design| 4.11.11 @ 7:10AM
Actually, to pay for all of Congress's reckless and subversive spending, the average taxpayer would have to borrow the money, since his share of the national debt is currently more than $125,000. From January 2007, when Democrats gained control of Congress, until January 2011, the national debt increased from about $8.6 trillion to $14.1 trillion, or about 64%. This is undermining our free economy. The recent announcement of $39 billion in spending cuts represents about 0.28% of the national debt, and about 1% of annual federal spending. It's as if a guy who is $15,000 in debt announced that he is cutting his spending by $42 a year.
Obama, showing is ignorance of economics, is about to announce that the solution is higher taxes. He and his fellow Demo-Socialists still don't get it: that higher taxes lead to lower tax revenues and slower economic growth. Repeat: they still don't get it. They have learned absolutely nothing from the collapse of the Union of Soviet Socialist Republics.
Rev Trask| 4.11.11 @ 7:54AM
Hey, did you feel that way when GWB obliterated the surplus that Clinton handed him in 2001? Or when VP Dick Cheney said: "Deficits don`matter--Ronald Reagan proved that" in 2002?
The Duke| 4.11.11 @ 8:15AM
Gotta love the CEO-like arrogance of Romney. While he struts regally, Michele Bachmann has quietly laid the ground work for a quick win in Iowa. That could happen if Palin and Huckabee sit out, which now appears likely, and give her enough of a lift to get the GOP nomination. I will die laughing if Mittens is stuck with the "silver" medal again, while Bachmann gets the nod.
Spoonman| 4.11.11 @ 8:53AM
ID, great points! And then focus on this, even if the Ryan budget were enacted, it increases the deficit by about $6 TRILLION over the next decade. If interets rates spike, which they surely must given the need to control accelerating inflation, the annual interest on the federal debt climbs higher . Then ask how do we begin to pay down the federal debt? I am not sure of the answer but this problem is not going to go away easily. We need tough mined elected officials who will return the focus of government to its very basic and constitutionaly mandated role!
Occam's Tool| 4.11.11 @ 1:19PM
Michelle's my Belle.
Occam's Tool| 4.11.11 @ 3:48PM
Doctors did not support Obama by a majority. The AMA may have, but it represents a minority of MDs (and growing smaller each year).
Gordon W.| 4.11.11 @ 4:58PM
This article is absolutely hilarious. The first few paragraphs present a premise which is later retracted. It editorializes statements from the Tax freedom foundation to the point where they no longer resemble the actual report. Here is the original article: http://www.taxfoundation.org/taxfreedomday/
A little note about the author. He resigned from the cato institute for writing articles in favor of Jack Abramoff's clients. Basically he made money on the side by making stuff up in support of who ever handed him money.
A note to The Duke on the Iowa primary: To win in Iowa republicans have to march so far to the right alienating almost the entire base of the party. The rest of their campaign is essentially trying to rationalize what they said during those few moments. If I were Romney, I wouldn't follow Michelle any where.
To Intelligent Design: Obama's plan is straight Keynesian economic. The thought was that the economy was starting to shrivel up and banks would no longer lend, just like in 30's. In reaction he injected cash in to the system, just like the 30's. To say Obama knows nothing about economics might be true, but his actions are straight out of the Keynesian play book.
Instead of attacking what he has done, a better set of questions to ask would be: Is whether Keynesian economics accurately describes our economy, whether the size of such infusion was proper (bigger or smaller) and whether the lending institutions should have been prodded to lend the money this time around (they clearly didn't and has been the main reason of the delayed growth)
axbucxdu| 4.17.11 @ 3:33PM
We got into this mess because of Keynesian ideas. The government responded by increasing the dosage to the crack addict. Yeah, that should do it. The Austrians get such a giggle from Keynesian "logic" such as it is.
That banks clearly didn't lend the injected reserves is sufficient cause to reject Keynes once and for all, but it seems the progs on both the left and right never tire of wishful thinking.
Well Gordo, you can finish the thought experiment yourself.
Leveut| 4.11.11 @ 9:42PM
"Maybe taxpayers will face the ultimate simplified tax form of just two lines: "1) How much did you earn? 2) Send it in.""
That would be Form 1040-BS, first proposed during the Clinton Administration.
Fed Up| 4.11.11 @ 11:40PM
Any idiot could walk into a US government agency or sub-agency (anything with at least 750 government employees) and cut 15-20% of what that agency is doing (the annual operating budget) AND staff.
There would be no adverse impact to the nation. None.
This should be done in every government agency. ALL OF THEM.
This is just a tiny start. But a 'start' that could occur tomorrow.
In fact, it might just rattle the cages enough of the remaining govt. employees that they start taking their stewardship/mission roles a bit more seriously.
Cut agency budgets and staffing rolls. Do it now.
"It is amazing how much government you never miss when it is not there."
Occam's Tool| 4.12.11 @ 1:10AM
Debbie Schlussel notes that we are spending $20 million of our oh so well spent $1.5 billion to create a "Sesame Street" for Pakistan.
What's next, Dora the Exploder? (Thanks to The Shadow)
Joe D.| 4.12.11 @ 12:54PM
Doug Bandow, I think you are being a little too simplitic with blaming Bush and the Republicans for the budget short falls. Although, I agree they share the blame and have been less than helpful with the most recent budget. That being said, the drug program was suppose to be privatised. However, thanks to the democrats it was not and has cost much more. We did not need it I would agree. As for the wars, I think they were right and justified. But we should have held the new governments to a higher standard and been able to leave by now. Also, they should have paid at least half of the costs for our blood, sweat and tears. Finally, the bail outs only happen when we had a more democrats running things and Bush being the moderate I knew he was agree to these stupid proposals by the dems.
So while I agree with you there is blame to go around, the bulk of it still falls at the dems feet.
Dee See| 4.13.11 @ 5:08AM
WHOEVER you are, wherever you are,
whatever your background ---one and all,
MARCH on the New York offices of the Federal
Reserve and the capstone, TAX FREE 'benny
violent' EUGENICS-driven foundations this July 4th.
REALLY-------------------------!!!!!!
Creative Recreation | 8.10.11 @ 10:31PM
is good