The 19th of last month was Cost of Government Day. This is a variable date put out each year by the Americans for Tax Reform Foundation and the Center for Fiscal Accountability where they determine the day on which the average has worked enough to pay for his share of government imposed spending and regulatory burdens.
In 2010, Cost of Government Day falls on August 19. Working people must toil 231 daysout of the year just to meet all costs imposed by government - 8 days later than last year and a full 34 days longer than 2008.
In other words, in 2010 the cost of government consumes 63.41 percent of national income.
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Cost of Government Day serves as a tangible reminder of the burden the encroaching cost of government places on taxpayers. Click here to read the entire report.
You might say that today, the 6th of September, is a bit late to be talking about this. But it isn’t old news just yet. This day they calculated is a national average. If you’re unlucky enough to live in Connecticut you have nearly two more weeks of government theft before you can keep your money, as your state’s COGD is September 17th.
The report is a must read. It’s a veritable checklist of every fiscally irresponsible thing the current administration is doing to add to the hole this country is in. Here though, is the most important takeaway.
Many focus on the danger of an impending deficit, leading politicians to clamor for higher taxes in order to fix the problem. But the deficit is not the problem—it is a symptom of the problem of unchecked government spending. Profligate spending fabricates justifications for expanding the current tax regime to include more onerous, expensive costs on taxpayers. [Emphasis added.]
Bingo – unchecked and unsustainable government spending and theft. And here’s an example of how absurd it is getting.
In 2009, the government spent $3.9 trillion dollars, and took in $2.1 trillion dollars in taxes. That is, the government spent beyond its means by $1.8 trillion—almost as much as it takes in on a yearly basis. This would be like a household that earns $100,000 annually spending $190,000 while it is $700,000 in debt. [Emphasis added.]
In the real world, a household with spending habits such as these wouldn’t be able to keep spending. Their credit rating would have taken a nose dive long ago. They would be seen as an obvious financial risk, and no one would extend them credit. But in our system, we are the creditors and we don’t have the authority to cut our debtors off. And without that authority, there is no end in sight.
The President’s proposed FY 2011 budget suggests that this outlandish profligacy is not going away anytime soon: while total spending in 2005 was $2.5 trillion, spending in 2015 will be $4.38 trillion. In other words, within the space of 10 years the federal budget is slated to nearly double in size.
Government spending is the big theme here, but the report doesn’t skimp on the details. Here are a few gems.
Government employment has increased by over 500,000 jobs since 2009.
That’s right. While the private sector has lost millions of jobs and has been making other difficult decisions to reign in costs, our government has been on a hiring and spending spree.
The report also asks, “did the stimulus work?” The answer, of course, is no.
The massive spending package passed under the guise of economic “stimulus” fails to acknowledge that the government does not exist in a vacuum—each dollar spent is extracted from the economy in the form of taxes, and then redistributed vis-à-vis spending policy. It is hardly surprising, then, that the “stimulus” succeeded in none of its intended goals. [Emphasis added. This reminded me of Tracinski's Law of Bailouts which states that "government money drives out private money. That is, every dollar in government funds pumped into the economy during a bailout wipes out at least one dollar in private funds, both through taxes and inflation and through the fear and uncertainty caused by government intervention."]
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In the wake of the “stimulus” failure to spur employment and recovery, the White House has launched a public relations blitz to drum up support for the spending boondoggle. However, while the administration continues to make the clever—because it is unverifiable—claim that the bill “saved or created” three million jobs, the economy remains at the highest unemployment rate the country has seen in almost three decades.
And what about Obamacare? It’s supposed to bring costs down right? Wrong.
President Obama’s ambitions to remake the health care system of the United States have been clear since the beginning of his administration. His appeals to “bring health care costs down” began when he was a candidate, and intensified upon his inauguration. He was going to provide high-quality, low-cost healthcare for every American, and simultaneously reduce healthcare spending.
The Patient Protection and Affordable Care Act (PPACA) was signed into law in March of 2010; instead of innovative solutions to difficult health care problems, the American people got a package of regulations, subsidies, and penalties. Critics predicted that the legislation would not reduce health care costs on the basis that taxation and regulation increase costs—and they were right. Within a month of the passage of the bill, AT&T announced that it was forced to make a $1 billion writedown due solely to the health bill, followed by similar announcements from other companies: Deere & Co. ($150 million)8 Caterpillar ($100 million) and 3M ($90 million).9 The costs of this legislation are quickly piling up.
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All told, the bill will cost taxpayers about $2.3 trillion in the first ten years of implementation. Future costs are more difficult to estimate, though it seems clear that they will certainly grow rather than shrink. Indeed, Douglas Elmendorf, head of the Congressional Budget Office, recently said:
The central challenge is straightforward and stark: The rising costs of health care will put tremendous pressure on the federal budget during the next few decades and beyond.
In CBO’s judgment, the health legislation enacted earlier this year does not substantially diminish that pressure. In fact, CBO estimated that the health legislation will increase the federal budgetary commitment to health care (which CBO defines as the sum of net federal outlays for health programs and tax preferences for health care) by nearly $400 billion during the 2010-2019 period.
In other words, it does not seem as though the growth of health care costs will be reduced by Obamacare, but in fact, will be increased steeply.
Of course, I agree with the report that the government needs to get out of the way so the market and actual competition can drive down health care costs. And two pieces of that idea are allowing the interstate purchase of health insurance and removing the tax penalty for purchasing individual health insurance.
I’ll finish this with an excerpt about the latest financial reform bill and the idea that the government is supposed to provide an “advanced warning system” to warn of systemic risks to the economy.
Despite this warning system, Senator Chris Dodd recently said “This legislation can’t prevent the next crisis from coming. No legislation can…” Despite the fact that federal regulators and the SEC failed to avert the mortgage crisis or monitor firms like Lehman Brothers, the bill doubles their power and budgets.
So the author of the bill admits that it won’t really work, but that he still wants the power to try anyway? That, my friends, is government in a nutshell.