Happy Cost of Government Day! You Worked for It – WSJ.com
The drama of the last-minute vote to increase the debt ceiling by $2.5 trillion has focused on projected deficits of the federal government and how they will add to the national debt. Those numbers are large. The national debt was $10 trillion when President Obama was inaugurated and is expected to be $15.5 trillion at the end of the year.
Yet focusing on the deficit understates the true cost of government. In fact, this year’s deficit of $1.5 trillion is “only” 40% of federal spending. And while federal spending has jumped to $3.8 trillion in 2011 from $2.9 trillion in 2008—a 31% increase—that does not include state and local spending, which is estimated to total $1.6 trillion in 2011, according to new report from the Americans for Tax Reform Foundation (ATRF). Nor do these numbers include the cost of individuals and businesses complying with federal regulations: The total cost of such compliance is estimated to be $1.8 trillion.
Focusing national attention on the deficit rather than on the total cost of government—federal, state and local spending plus the cost of the federal and state regulatory burden—causes several problems. First, it deliberately understates the true cost of government. It also allows advocates of ever-larger government to misdirect our attention away from the bigger picture to just “the deficit.” And there are ways to dramatically increase the cost of government without adding to the deficit: new regulations and new spending programs matched with higher taxes. (Think ObamaCare and cap-and-trade rules from the Environmental Protection Agency.)
To more accurately measure the true cost of government, ATRF has calculated a Cost of Government Day. We determine this each year by adding the cost of government spending at all levels to a conservative estimate of all regulatory burdens—and then counting how many days of the year Americans work to pay the costs of government.
The Tax Foundation divides total federal, state and local taxes by total national income to come up with Tax Freedom Day. This year America worked until April 12 to pay all taxes.
When you include the costs of federal deficit spending and the regulatory burden this year, however, you don’t reach the Cost of Government Day until Aug. 12. Americans will work for 103 days to pay for federal spending, 44 days for state and local spending and 77 days to cover the cost of the regulatory burden.
This is the third year in a row that Americans will work into August to pay for the cost of government. Before 2009, the day never fell later than July 21. Looking back, we see that the Reagan years held the Cost of Government Day steady at July 4. Under the first President Bush, it moved forward 15 days. But Americans gained 15 days when the day moved back in the last six years of divided government with a Republican Congress against President Bill Clinton.
During the presidency of George W. Bush, however, Cost of Government Day moved forward to July 16 in 2008, from June 28 in 2000, costing taxpayers 18 days of extra labor. Since he took office, President Barack Obama has pushed the day all the way forward to Aug. 12. In other words, Americans are now working 27 more days per year to pay for government spending and regulations than on the day Mr. Obama became president.
Looking at the total cost of government rather than merely the annual deficit gives a more complete picture—and a more frightening understanding—of how much government costs each one of us. It also suggests how clever politicians can hide the cost of government, disguising increased spending by urging us to focus on the deficit and then “paying for” higher spending with higher taxes. Government grows but the deficit is unchanged.
Regulations do not even show up in the federal budget and are rarely covered on the nightly news. But this year they will cost Americans $2.8 trillion, consuming 77 days of labor for the average worker. More than two months a year we work just to pay the bills imposed on us by the EPA and other expensive regulators.
The new rule established by House Speaker John Boehner is that any debt-ceiling hike must now be matched by spending cuts of at least the same size, and the Republican rejection of any tax increase constrains the president’s ability to further hike spending and debt. So look out for the Obama administration to focus on expanding government through increased regulations.
The watchdog media report relatively well on the White House and Congress. But they don’t have the bandwidth to report on, never mind to critique, the explosion of regulations underway. Mr. Obama is counting on this.
