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).
I’m not suggesting that no regulation serves a legitimate
interest. But many don’t, while numerous others are ludicrously
inefficient and costly, even if they theoretically serve a sensible
end. Rules like Corporate Average Fuel Economy standards, which the
administration plans to push ever skyward, represent both bad
objectives and bad means. In this case, the government arbitrarily
decides on auto gas mileage, and does so in a manner which pushes
people into smaller cars,
resulting in more accident deaths. Heckuva
job, Barack!
State and local spending adds 44 days to COGD. This burden
fell a bit over last year, in part because Congress voted to give
cash that it didn’t have to governors and legislatures to spend.
But with Washington facing increasing pressure to cut spending, the
good times of bountiful federal gifts for state lawmakers likely
are over. Noted Feldman: “When this injection of federal dollars
finally dries up, taxpayers in the states will be on the hook to
pay for the expansion of state spending programs upon which
acceptance of the ‘stimulus’ funds was contingent.”
Finally, state and local regulation accounts for 28 days.
Admittedly, this is not as painful as when federal bureaucrats show
up and declare: “Have no fear, I’m from Washington and I’m here to
help.” Still, just when Americans think they are done paying for
government they find themselves in the crosshairs of a county or
city busybody. And, noted Feldman, “2011 regulations will consume
21.2 percent of net national product which, compared to 16.1
percent ten years ago in 2001, is a 31.6 percent increase in the
regulatory burden within only 10 years.”
Obviously, the burden caused by states and localities
varies across America. While the national average is August 12,
residents of Connecticut are in bondage to government until
September 10, a month later. New Jersey comes in at number two,
with a COGD of September 6. New Yorkers work for government until
August 30. Residents of Maryland labor until August 20.
At the other end is Mississippi, with a COGD of July 19,
almost a month earlier. The COGD in Tennessee is July 20, in South
Carolina is July 23, and in New Mexico, South Dakota, and West
Virginia is July 26.
Two states fall on the national average: Nebraska and
Virginia.
Although the best and worst states tend to hold their
positions over time, there is movement within the ranks. Relative
to the national average, Alaska, North Dakota, Florida, Louisiana,
and Nebraska saw the sharpest increase in their COGD. In contrast,
Georgia, Idaho, South Carolina, Tennessee, Oklahoma, and Vermont
most dramatically reduced the burden of government.
All Americans deserve to live in states with earlier
COGD’s. But that will require a conscious effort to shrink
government. As Feldman concluded: “The path to an earlier Cost of
Government Day requires lasting spending reductions. These
reductions must go hand-in-hand with repealing regulatory policies
and laws that discourage innovation and competition. Whether the
government’s hand is in cars or energy production, American
economic recovery yearns for independent markets where competition
provides better, more affordable goods and services.”
Summer is speeding toward its conclusion, and only now are
Americans finally paying off their bills for government. Their
labor, rather like that of the serfs of old, is being held hostage
for the benefit of faraway lords — in this case, politicians in
Washington and 50 state capitals. It is time for the people to say
no more!
