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Policy: Budgets & Deficits

Government will take every penny you've earned so far this year: Examiner Editorial

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Opinion,Editorial,Taxes,Barack Obama,Budgets and Deficits,Washington Examiner,Magazine

As Americans celebrated this nation's birthday on July 4, most were likely unaware of a less uplifting commemoration that fell on the calendar during the same holiday weekend. That was Cost of Government Day, or July 6, 2014. The date's significance is one of political math and symbolism. By the time 2014 ends, local, state and federal governments will have consumed the equivalent of every dime of national production created between New Year's Day and July 6. The money goes to government spending and regulatory compliance. Americans have only from Monday until year's end to produce anything for themselves.

The concept of CGD is similar to that of Tax Freedom Day, which fell on April 21 in 2014 and which is defined as the date by which the average American family has earned enough to pay its annual tax bill. But CGD takes GDP as its denominator instead of income, so it falls later in the year because it accounts for both deficit spending and regulatory compliance burdens.

According to the Cost of Government Center (which is part of Americans for Tax Reform), it took the U.S. economy 121 days - roughly the first four months of the year - to produce enough for government to spend at all levels (81 days for federal and 40 days for state and local spending). It took an additional 65 days to produce the resources required to pay for the costs of regulatory compliance at all levels.

This is just another way of saying government will consume 51 percent of U.S. gross domestic product in 2014. This is an average for all 50 states, however. Residents of some states - such as New York, New Jersey, California and Connecticut - will have to work a few more days or weeks before they've satisfied the demands of big government's advocates in their respective state capitals.

As it is now measured, CGD had never fallen as late as July 1 prior to 2009. Under President Obama, it has stretched beyond July 1 for six years running. Its high water mark, at least for the moment, came in 2009 and 2010, when it was July 21. It has since gradually retreated on the calendar thanks to state budget cuts and various federal spending reforms forced on President Obama beginning in 2011 in the sequestration process. Still, CGD is significantly later this year than it was in 2008, when it fell on June 20, before the official start of summer.

Conservatives who cite the Constitution as a justification for limiting government are often accused of being “anti-government,” but this is highly misleading. America's founders were clear on the need for government as an essential element of a stable, prosperous society. When formed and run properly, governments are essential guarantors of human rights, freedom of commerce and social stability.

But government can also grow large enough to defeat these noble purposes. The founders would surely be appalled at the oversized federal government now devouring half of the value of Americans' productive labor.

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