In our debt-ravaged country, Cost of Government Day actually falls much later in the year than it seems.
Tax Freedom Day is long past. Americans supposedly finished paying for government on April 12.
But not really.
Taxes once reflected the cost of government. No longer. This year Uncle Sam is borrowing 40 percent of the money necessary to fund federal operations. Regulation imposes a separate quasi-tax on the American people.
As a result, Americans don’t actually stop paying for government this year until today, August 12. That’s 224 days representing more than 61 percent of national income. Americans for Tax Reform’s latest Cost of Government Day report, by Jacob Feldman, makes for a depressing read.
COGD actually falls two days earlier this year. Alas, noted Feldman, the “estimates are premised upon CBO’s ambitious 2011 calendar year estimate of 3.7 percent GDP growth. CBO numbers may overestimate annual growth,” which means “the estimate in this report may significantly underestimate the real cost of government for 2011.”
Moreover, COGD still falls far later than just three years ago, when it was only July 18. Worse, explained Feldman, “the average American will have to work an additional 41 days to pay off his or her share of the cost of government compared to ten years ago in 2001, when COGD was July 2.” COGD jumped by an incredible full month between 2008 and 2009, when Congress was spending money on anything and everything in the name of “stimulating” the economy. (Sadly, it hasn’t worked particularly well — just look at the last unemployment report).
Indeed, the Obama era, to which Republican George W. Bush contributed, is a fiscal tragedy. Given President Barack Obama’s druthers, Washington will be permanently enlarged. He hasn’t even finished his first term, but he already has made his mark. Wrote Feldman: “the three years of the Obama Administration have been three record-setting years of federal government regulation and spending — a 21.78 percent increase relative to the average size of the federal government between 1977 and 2008.”
The problem is not just outlays but debt. From 2009 to 2011 Uncle Sam ran up the largest deficits in history. Moreover, wrote Feldman, “These spending sprees constitute the largest deficits as a percentage of GDP since World War II. In the past three years alone federal debt has increased by nearly 80 percent, compared to an increase of 25 percent over both terms of the previous Administration. Debt now stands at its highest level since 1950.”
And it’s going to get worse. Much worse. Never mind the recent budget deal, which does not cut expenditures — in fact, federal spending and borrowing will continue to increase. Observed Feldman, “The two-day decrease of the 2011 COGD is only a temporary fall before projections of increased future spending.” ObamaCare alone is likely to “add $2.3 trillion to COGD over its first decade,” he warned. So much for health care “reform,” which bent the cost curve up, not down.
Entitlements, which are driving federal spending ever upward, remain untouched. Military spending may be cut some or not at all. And there are more domestic bail-outs to come. For instance, Standard & Poor’s just downgraded the debt of Fannie Mae and Freddie Mac, which continue to lose money.
Anyway, no current Congress can bind a future Congress. The Standard & Poor’s rating downgrade for federal debt offers a dramatic warning to Americans, one which past experience suggests is likely to go unheeded.
Unfortunately, Americans are not getting their money’s worth from all they are paying for government. Spending is the most important component of the COGD, which accounts for 147 days of labor. Regulation runs another 77 days — a roughly 50 percent surtax on top of government outlays.
The biggest single cost is federal spending, which consumes 103 days of Americans’ lives. People are working well into April to pay for all of the “benefits” graciously bestowed by Uncle Sam. This figure edges up again every time a new interest group shows up to lobby in Washington.
Of course, after negotiation of the latest budget deal the lobbyists became more active than ever. The ink was barely dry on the accord when the New York Times published an article entitled: “Jockeying Anew in Congress In Next Budget Fight Phase: A Panel in the Making, and a Swarm of Lobbyists.” The Washington Post entitled an article published on the same day “Defense, Health-Care Lobbyists Prepare to Go On the Offensive.” All that matters in Washington is protecting the spenders from the taxpayers.
The second biggest expense is federal regulation, which accounts for 50 days — almost two months of the average Americans’ life. (This assessment only includes compliance costs. Lost economic output, the so-called “deadweight” economic loss, is not counted, and would raise costs dramatically).
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