Tax Freedom Day is today — next year it could come a month later.
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Indeed, with an annual budget of $3.6 trillion Washington has been borrowing a third of its funds. At the same time, as if by magic, the federal government, through the Federal Reserve, has been buying 60 percent of its own debt, issued by the Treasury Department. Washington has been partying wildly since 2008, with the cascade of bailouts and porculous outlays that have been tossed down the proverbial rat-hole.
Unfortunately, things are only going to get worse. Fannie Mae and Freddie Mac continue to lose money, the Federal Housing Administration is over-extended, and the Pension Benefit Guaranty Corporation needs its own bail-out. Uncle Sam has more than $100 trillion in unfunded Social Security and Medicare liabilities. America’s dubious wars and nation-building campaigns have turned into unfunded liabilities, with a trillion dollars or more of spending to come to simply provide long-term care for those grievously wounded in combat.
Moreover, if Obamacare survives the Supreme Court, federal health care spending will explode. Warns Charles Blahous of the Mercatus Institute, through 2021 the “reform” measure is “expected to add at least $240 billion and as much as $530 billion to federal deficits while increasing federal spending by more than $1.15 trillion over the same period and by increasing amounts thereafter.” And this estimate presumes that Obamacare contains medical spending, while its perverse incentives actually will do the opposite.
The Congressional Budget Office “baseline” budget — which assumes everything will go right from a fiscal standpoint — figures an additional $2.9 trillion in red ink from 2013 to 2022. If President Barack Obama’s budget were passed, the red tide would rise to $6.4 trillion. And if policy runs aground, as so often happens, the CBO’s “alternative fiscal scenario” predicts another $10.7 trillion in borrowing over the coming decade.
CBO concluded simply: “The federal budget is on an unsustainable path, because federal debt will continue to grow much faster than the economy over the long-run.” The government’s good times might continue for a little longer. But soon the bill will come due. And when it does Americans can bid farewell to today’s relatively early TFD.
THE FEDERAL DEFICIT is expected to exceed $1 trillion this year. If Americans were taxed to cover that amount the TFD would jump nearly a month, to May 14. That would set a new postwar record by nearly two weeks. The combined TFD would lag merely one week behind the comparable total in 1945, when the U.S. was engaged in a devastating world war.
Of course, TFD is a national average. Some states do better. Residents of Tennessee finish paying their taxes on March 31. TFD in Louisiana and Mississippi is a day later. South Carolina and South Dakota come in at April 3 and 4, respectively.
Unfortunately, other states are worse. Connecticut continues to hold worst in the nation dishonors, falling in at May 5. That’s two and a half weeks after the national average. New Jersey and New York sit at May 1. Washington comes in at April 24. Illinois, Maryland, and Wyoming come at April 23.
America faces a bipartisan crisis. Democrats are natural big spenders. Republicans like to pose as fiscal hawks, but their record in office is far different. The Bush administration and Republican Congress were wastrels par excellence. They laid the debt foundation on which President Barak Obama has been so cheerfully building. And political courage is not much in evidence among most GOP leaders these days, despite their rhetorical posturing.
Tax Freedom Day’s retreat in the face of increased government spending should act as a spur to action. Unless Americans take charge of federal finances, far worse is in store. Who knows? Maybe some day we will never stop working for government.
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H/T to National Review Online