Americans finally finish working for the federal government on
April 12 this year. That’s three days later than last year, but
still a couple weeks earlier than Tax Freedom Day in 2006 and 2007,
April 24. The record in both peace and war was May 1 in 2000. Had
Al Gore defeated George W. Bush in that year, TFD probably would
have continued rising, as it had since Bill Clinton’s election in
1992.
Unfortunately, April 12 still isn’t much to be happy
about. TFD rose to April 12 in 1962, but quickly fell back. In 1967
TFD again hit April 12, eventually oscillating between April 16 and
24. TFD fell to April 19 in 1992 before beginning another sharp
rise. As a percentage of income taxes hit 30 percent in 1969 and
hovered around the level for years. The tax burden did not fall
below 29.1 percent until 2003. This year that percentage will be
27.7, a welcome but only marginal improvement.
Total taxes this year will cost Americans more than what
they’ll spend on food, shelter, and clothing combined. Not all of
these purchases will prove worthwhile for all people, obviously.
But compare their value to what the government does with their
money.
Taxpayers are bailing out virtually every interest known
to man — plus a few not previously recognized. Banks get money.
Auto companies get aid. Labor unions get benefits. Homeowners get
help. Insurance companies get cash. Investment funds get
guarantees. Property sellers get subsidies. Taxpayers get the
bill.
But all this pales in comparison with the cost of last
year’s health care legislation. Everyone knows that the
administration and Congress, like the famed Isuzu salesman, were
lying. Taxpayers soon will be paying off insurance companies,
doctors, and pharmaceutical companies — just coincidentally all
among the bill’s most avid supporters — as well as people forced
to buy high-priced health insurance.
Americans also get the pleasure of subsidizing a gaggle of
rich allies around the world, such as the Europeans, who are too
busy supporting welfare states to maintain effective militaries.
South Korea and Japan also are on the U.S. military dole, leaving
the heavy lifting to Americans. Even corrupt Third World
politicians, like Hamid Karzai, are on Washington’s military
payroll. America’s ungrateful dependents now include the Libyan
rebels, who blame the U.S. for the failure of their untrained,
uncoordinated, and divided forces.
Taxpayers pay for domestic “welfare” too, which has done
so much to destroy families and communities. Welfare reform in 1996
reduced the damage, but the so-called “stimulus” bill reversed
course. The latter also wasted money without promoting long-term
growth. In fact, the Congressional Budget Office figured that this
legislation, after providing a short-term boost, will permanently
reduce economic activity starting around 2015. Which means
working families will earn less while paying higher federal
interest payments on the borrowed funds.
There’s so much more. A crowd favorite is pork barrel
projects, used by big spending politicians to generate political
support. Yes, I’m a thief, the lawmaker admits, and I stole from
you, but I’ll share a bit of the ill-gotten loot. Vote for me! Such
is the appeal of democracy.
No wonder two-thirds of Americans believe they are
overtaxed. Eight of ten mainstream voters believe that they pay too
much. But not the political class. According to Rasmussen Reports,
87 percent of America’s governing elite, who decide how to spend
everyone else’s earnings, disagree. They see a penny not taxed as a
penny not spent, defeating their role in life.
More significantly, TFD doesn’t mean much anymore. Taxes
provided a relatively accurate measure of the burden of government
when the budget was balanced — most recently in 2001. (Guess which
president was most responsible for that budget: It wasn’t a
Republican.) When you finished paying taxes, you were actually done
paying for government.
No longer.
The federal budget this year will run about $3.8 trillion,
give or take a few dozen billion dollars, which hardly counts
anymore. Borrowing will account for between $1.5 trillion and $1.65
trillion, depending on who is doing the estimating. That is roughly
40 percent of total federal outlays. Unless Uncle Sam
defaults on his obligations — a tempting thought, since it would
cut taxpayers’ present obligations while making future borrowing
much more difficult — that money will eventually have to be
paid.
Although the borrowing binge is occurring during Barack
Obama’s presidency, the Republicans also are responsible. George
Bush and the GOP Congress turned a surplus into a big
deficit.
They increased federal spending across-the-board. They
created the Medicare drug benefit, with an unfunded liability of
around $15 trillion. The president launched and Congress funded two
unnecessary nation-building expeditions in distant Third World
lands. And President Bush was the driving force behind TARP and
assorted other bail-outs. Indeed, his officials admitted that they
had no “metric” for the $700 billion TARP proposal; they just
wanted a “big number.” And they got it.
In short, the GOP created a solid foundation for President
Obama’s Big Government empire.
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.
