Special Report

No Time to Relax

Last week Americans finally stopped working for government -- this year. How long before the magic event occurs in August?

By 7.17.06

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Americans finally have stopped working for government. Many people are familiar with "Tax Freedom Day" -- April 26th this year -- when they effectively finish paying their taxes. But with government running huge deficits and imposing massive regulatory requirements, we all spend a lot more time working for government. Cost of Government Day (COGD) was July 12. Remember that when politicians cry about government being starved of needed revenue.

There has been some celebration in Washington, and especially the Bush administration, at the announcement that the deficit is shrinking. That's good news of a sort, but not much.

First, the administration and Republican Congress turned a surplus into deficit. So they don't get much credit for slowing the flow of red ink. And the future -- especially with the blockbuster drug benefit greatly inflating Medicare costs -- looks dismal indeed.

Second, the deficit is down primarily because tax revenues are up. The New York Times reported "that tax receipts will be about $250 billion above last year's levels and that the deficit will be about $100 billion less than what they projected six months ago. The rising tide in tax payments has been building for months, but the increased scale is surprising even seasoned budget analysts and making it easier for both the administration and Congress to finesse the big run-up in spending over the past year."

Over the past several years, actually. Brian Riedl of the Heritage Foundation figures that per household federal spending is $23,760 this year, the highest (inflation-adjusted) level since World War II and up $5000 from just five years ago. That's a $1,000 a year increase.

It's good to know that incentives work, as proponents of tax cuts argued. But taxes aren't likely to keep rising fast enough to enable Congress to continue its wild spending spree.

Nor would it be good if revenues did go up that fast, if Congress wasted them all. The problem is not so much that government is spending a lot -- sometimes, like in World War II, doing so is necessary -- but that Congress is wasting a lot. The cornucopia of new revenues is going for earmarks, social programs, corporate welfare, and much, much more.

The surest demonstration that the falling deficit is limited good news, at best, comes from the Americans for Tax Reform (ATR) report on the Cost of Government Day. The news is simply atrocious.

COGD was July 12, up one day from last year and up 12 days from 2006. Spending alone accounts for about ten of those days: eight days for the federal government and 1.5 days for states and localities.

Increased regulations add 2.3 days to the average American's burden. Reports ATR: "New regulations stemming from the War on Terrorism and corporate scandals dramatically increased the regulatory burden in 2001 and 2002. At the same time the cost of tax compliance has substantially increased."

Particularly shocking is the fact that Americans have been moving backward under a Republican president after making substantial gains under President Bill Clinton. Notes ATR, COGD fell by 15.4 days from 1992 to 2000. Half of that reduction has been wiped out in the last six years.

Even worse, it would not have been hard to hold down the burden of government. If spending had simply increased at the rate of national income since 2001, the budget would be in balance -- even after the Bush tax cuts. The surpluses (meaning money available for additional tax reductions) would have been huge had outlay growth stayed below national income, as during much of the 1990s.

Of course, since states differ in their commitment to fiscal fidelity, living in the wrong state means suffering through a much higher COGD. Worst is Connecticut -- its residents will have to work until the end of the month, July 30. COGD in the District and New York is July 27.

The day of liberation falls on July 23 in New Jersey, July 21 in Washington, and July 20 in Minnesota. Another eight states run above the national average. (Big spenders like California and New York are really big spenders, compared to the more numerous smaller states that fall below the national average.)

Tax cuts are good. But the crisis today is government spending. It will be hard enough to make past tax reductions permanent, let alone to enact new ones, if spending is not curbed.

And if we don't begin cutting the ludicrous fat -- bridges to nowhere and rain forest parks -- how will we address the really serious issues, particularly Medicare and Social Security as they hurtle towards bankruptcy and financial collapse?

Be happy, but do worry. You're finally done working for government. Celebrate by telling your elected officials to start cutting the burden of government -- now.

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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).