Happy Cost of Government Day

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This year Americans have worked until today, July 16, to pay for the total costs of federal, state and local government. This is 197 days of the year consuming 53.9 percent of national income. Over the past 22 years, in only four years (1982, 1983, 1991 and 1992) did Cost of Government Day fall later in the year.

groverchart.gifFederal spending will consume 83.7 days. State and local spending will consume 50.5 days effort. Federal regulations cost 4l.7 days and State regulations cost 20.9 days. The spending data is precise, the regulatory burdens are understated.

Compared to when George W. Bush assumed the presidency in 200l, federal spending now consumes an additional three days of your life in 2008. The burden of federal regulations increased by one day after having remained stable as a percentage of the economy for the previous four years.

State and local spending increases cost Americans six additional days since 2003. Since the election of more liberal governors and state legislators in 2006, state spending has increased by 13.5 percent relative to the general economy.

Not all states are the same. Connecticut citizens with a more expensive state and local government burden will have to wait an additional two weeks for their cost of government day: July 31. Virginians work two days longer than the average American and Maryland citizens toil a full work week more until July 21.

Federal spending has increased $867 billion from 2001 to 2008 or stepping past September 11, federal spending has increased $570 billion dollars from 2003 to 2008. Since the 2003 tax cut on capital gains and dividends, the economy has grown by $2.9 trillion, federal revenues have shot up $785 billion. But had the federal government limited federal spending to grow only as rapidly as the economy since 2000, the budget would have been in balance by 2006 and in surplus today.

Politicians and pundits tend to focus on the federal deficit.

But the deficit is the uninteresting and unimportant number that is the difference between two very interesting and important numbers: total government spending and total taxes raised. A government that costs one hundred dollars of spending where ninety dollars are taken in taxes and ten are borrowed is as expensive and burdensome as one where the government takes and spends all hundred. No money is freed up for the economy by taking an additional ten in taxes. The true cost of government, whether paid for today through taxation or borrowing, is total government spending plus the regulatory burden paid by consumers in higher prices.

The last fifteen years have been a unique period in American history. Since the 1993 Clinton tax increase that passed without a single Republican vote--there has not been a net tax increase passed by Congress and signed by the president. Fifteen years without a legislated tax hike.

That is the longest period in American history going back to George Washington. Since 200l, there have been 15 tax cuts. Some small. Most temporary.

The pro-growth tax cut of 2003 created economic growth that by2008 increased the number of American jobs by eight million, real per capita income grew $2,887, the stock market increased by $3.7 trillion in value and federal revenues jumped by $785 billion. Those tax cuts lapse in January 2011 and already the markets are anticipating losing those gains.

The next president and Congress will not only need to maintain the relatively pro-growth lower tax rates on individual income and investments, but -- as Cost of Government Day painfully reminds us - deal with the true costs of government: total government spending and the regulatory burden.

Norquist is president of Americans for Tax Reform and author of Leave Us Alone – Getting the Government’s Hands Off Our Money, Our Guns, Our Lives.

In conclusion...

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