June 22, is Cost of Government Day. That is, today is the day, starting from Jan. 1, that the average worker will have finished earning the share of his or her annual income that will be consumed by the total cost of government.
Cost of Government Day is different than Tax Freedom Day. The latter measures when the average worker finishes earning the share of his or heryearly income that will be consumed by total taxes, federal, state and local.But the total cost of government is not measured solely by taxes. As an economicmatter, the total cost of government is measured at a minimum by the total costsof government spending and regulation.
At Americans for Tax Reform, we have calculated that total government spending, Federal, state and local, plus a very conservative estimate ofthe total cost of government regulation, will consume about 47 percent of net national product this year. As a result, the average worker will have towork almost half the year just to pay the cost of government this year, untilJune 22. This is one day later than last year, as the cost of governmentcontinues to grow.
Our calculation by no means includes all costs imposed on the people byour government. It does not include the economic inefficiency and loss ofeconomic growth caused by taxes and the costs of regulation. A thorough and sophisticated study by Richard Vedder at the Center for the Study ofAmerican Business at Washington University in St. Louis estimates that federal regulations alone reduce economic output by $1.3 trillion each year.
Moreover, no one is able to estimate the cost of all federal, state andlocal regulations. Most state and local regulations were not even included inour study.
Even so, we conservatively estimated that government regulation nowcosts the country more than $1 trillion per year ($1,064 billion). Total federal,state and local spending is now more than $2.6 trillion ($2,658 billion), for atotal government cost of $3.7 trillion ($3,722 billion).This total cost of government is oppressive, depriving the Americanpeople of economic freedom and control over their own lives. At a minimum, thegovernment is cutting your income and prosperity in half. What the government doeswith that money does not seem to be nearly worth this enormous cost.So much of what the government does can in fact be done far betteroutside its system of taxes, spending and regulation. For example, workers todaycan get a far better deal out of personal savings, investment and insuranceaccounts than through Social Security, a huge component of the federal governmentin itself. Such personal savings and insurance accounts also are the bestsolution for the collapsing Medicare program. Private sector employment is stillfar better for the poor than our still huge welfare system.
And not all regulations are critical to the public health and safety.Federal Express was introduced to a round of unnecessary and counterproductivecosts when federal regulators insisted its policy of refusing to hire deliverytruck drivers with sight in only one eye was discriminatory. In Kansas City, regulators ordered a bank to install a Braille keyboard on a drive throughATM, on the driver's side. The bank still does not get much business fromblind drivers.
Regulators forced San Bernardino County to relocate its new hospital and spend $4.5 million to provide 10 acres of protected habitat, for a nest ofeight flies. The federal government now even regulates the amount of waterallowed for new toilets!
A sharp reduction in the size, scope and burden of government in Americaat all levels would greatly increase the freedom and prosperity of theAmerican people, while still serving all essential humanitarian and social goals.