It isn't often that we see a real, tangible result from the assorted
bureaucrats, technocrats, plutocrats and republicrats that scurry
around the halls of government. That probably explains why the various
branches of the U.S. government get such low confidence ratings while
the military, which thrives on concrete results, is at the top of the
recent 2008 Gallup Annual Update on Confidence in Institutions
poll. However, President Bush has delivered on one thing-he lowered oil
prices by $9.26 per barrel. That is a 6.3% drop on the price of crude
oil for August delivery.
How did he manage it? After months of insanely rising oil prices,
trips to the Saudis to beg for relief, preening and posturing on the
part of congressional leaders and members alike and grade-school style
finger pointing by everyone involved, Bush finally remembered that he
has some power as President and lifted the Executive Order his father
put in place to stop oil exploration and drilling off of America's
coasts. In doing so, he challenged Congress to lift their moratorium
when it comes up for renewal on September 30^th^. As if to
demonstrate the affect that such announcements have on the futures
markets, the price dropped, not after the announcement, but as the President was speaking. Now the ball is in Congress' court.
They are balking now, that is to be expected, but the question is
still open as to whether the Democratic leadership concedes defeat on
what is, for them, an ideological question. The alternative would be
for them to decide that ideology is far more important than the good of
the people and so carry on in the face of hard proof that even
threatening to increase supply will lower prices. You wouldn't think
that was rational, but ideological thinking is not rational. So, what
if they do renew the ban? Will they have enough votes to override a
potential presidential veto? Probably not, but you can never tell.
September 30^th^ is going to be an interesting day.
Still, it does seem to beg a larger question: If it has taken this
long, with so much infighting, and people have had to go to so much
effort, to get these people in Washington to do what is +right for the people+-as
opposed to doing what is good for special interests or upholding a
certain ideology-then why are we paying them so much of our hard-earned
money? Honestly, if the government was a business, they would have
failed a very long time ago.
Cost of Government Day
That question, what are we paying for, is particularly apt today. It is
Cost of Government Day. According to Americans for Tax Reform (ATR),
Cost of Government Day (COGD) is +the
date of the calendar year on which the average American worker has
earned enough gross income to pay off his or her share of spending and
regulatory burdens imposed by government on the federal, state and
local levels.+ That means not just taxes, but the cost or
regulation, the deficit, all the hidden costs of government at every
level. This year, average Americans had to work 197 days just to meet
all costs imposed by the various levels of government. That translates
into government as a whole consuming 53.9% of the American income. In
2007, COGD was July 12^th^. In 2000, it was June 29^th^. To the folks at ATR, it means that the cost of government is rising higher than the national income.
Of course, that is the average American. The fact is that the state
in which you live determines your real Cost of Government Day. July 16^th^ is the overall national COGD, and that is matched by both Illinois and Colorado. If you live in Alaska, your COGD was June 21^st^. Other side of the coin, however is as follows:
Wisconsin -- July 17
Rhode Island -- July 17
Virginia -- July 18
Nevada -- July 19
Hawaii -- July 19
Florida -- July 19
Minnesota -- July 20
Maryland -- July 21
Massachusetts -- July 21
Washington -- July 22
California -- July 23
New York -- July 28
Washington, DC -- July 26
New Jersey -- July 30
Connecticut -- July 31
The COGD Breakdown
The average American's 197 days of government labor-it is really
difficult to think of it as working for yourself-breaks down along
spending and regulatory lines as follows:
83.7 days to pay for Federal spending
41.7 days to pay for Federal regulation
50.5 days to pay for State and Local spending
20.9 days to pay for State and Local regulation
How many more days do you want to work to support government
spending and regulations? The dangers here are in the rising costs of
current programs and regulations and the threat of new entitlements and
additional regulatory burdens. It is estimated, for example, that the
global warming regulations now before Congress, especially the cap and
trade bills under consideration, would add an additional trillion
dollars in regulatory costs.
Soak the Corporations
More regulatory costs? Corporations will pay them, not people! They make money hand-over-fist, so we can soak them!
Not really, you see if American corporations were any more "soaked"
they would begin to dissolve. Corporate taxes in the US are 35%. Add in
State and Local taxes and that means the average corporation here in
the US is facing a 40% tax rate. As of 2007, the average corporate tax
rate was 24%. This is essentially a self-imposed, self-destructive
tariff that hurts our ability to compete on the world market, keeps
these companies from creating jobs and further stimulates the flight of
wealth from the US to foreign countries. As for the thought that it
isn't people who pay for excessive regulations, remember that, as a
point of fact, corporations pay no taxes at all. Their customers do. In
this way, corporations act as tax collectors rather than as tax payers.
Soak business and we just soak ourselves.
An Intelligent Tax Policy
Here, as with the energy question, we return to the shadowlands of
ideology, where class warfare is the order of the day. That has to end.
The United States, as a nation and as a people, cannot afford the
luxury of ideology-driven policies any longer. It is time to see what
has worked for the immediate and overall benefit of the American people
in the past, judge the circumstances of those successes and replicate
them. It doesn't take a complex belief system; just a clear goal and a
mind open to the lessons of history. So, what might these goals be?
Here are a few that might be worthwhile:
Increase government revenues to support public agendas.
Lower energy costs.
Stem the flood of American wealth going overseas.
Increase the amount of foreign wealth coming to America.
Increase investment in American business to create new businesses and new jobs.
How can you reach these goals? You need a tax policy that rewards
success and supports prosperity. From success comes prosperity and from
prosperity comes all sorts of good things like jobs, good wages, high
government revenue and so on. Have we ever had that? Sure, quite a few
times; the most recent being in the 1980s and the mid to late 1990s.
What did these have in common? In both cases, governmental spending was
cut-not just the growth of spending but the spending itself-and taxes
were cut. The result? Deficits dropped or vanished altogether as the
budget came into balance with higher income and lower spending,
business flourished, good jobs were created, wealth came into the
country, energy costs were low. American business was a hot-house of
innovation and the overall standard of living was dramatically raised.
Of course, it wasn't perfect. There were those whose fortunes went
down even as those of the nation as a whole were rising; and there were
those who took advantage of the situation to enrich themselves at the
expense of others. Politicians who were not ideologically comfortable
with the methods used to reach these levels of prosperity took hold of
these issues and the environmental question and did what they could to
raise taxes, increase regulations and, in general, flatten the economic
landscape by "managing" the economy more and more. When that happens,
taxes rise, spending rises, regulation rises and we all spend more days
out of the year working for the government.
Some Specific Ideas
Many of us just got a so-called economic stimulus check from the
Federal Government. That was nice. I am not sure it stimulated much of
anything since so much of it went into the assorted gas tanks of the
American people and to pay debts, such as student loans, owed to the
government. Between that and the energy taxes the Feds impose, I am
sure that Washington has gotten a lot of it back by now.
The point is that in spite of the pleasure we get from receiving a
check from the government-as opposed to writing one to the IRS-such
cash grants are very short term solutions to our economic woes at best,
and fully useless at worst. Either way, they are not what we need to
stimulate the economy. What we need is something we have not had since
the income tax was written into the Constitution: A good,
prosperity-oriented tax system.
There are many ways taxes can be reformed, from a simple flat tax to
the so-called Fair Tax to something that may still have so-called
progressive elements in it and yet serve to stimulate the economy
rather than drag it down. The truth is that both the flat tax and fair
tax are long shots. They don't seem to redistribute enough wealth for
some politicians and they eliminate government's ability to do special
favors through the tax code. After all, a 17% flat tax with no
deductions or credits is not much to work with when you want to reward
a major campaign donor. So, it is likely that some sort of graduated
tax scheme will persist. History tells us that any reforms that are
made to such a system have to reduce the cost of capital.
History Lesson: America, 2003
The Bush tax cuts were tiny compared with those of Ronald Reagan and
John F. Kennedy, yet like their predecessors, they still had a major
effect. By October, 2003, the Bureau of Labor statistics reported that
more Americans were employed than ever before. This period also marked
an increase in business investment. Orders for non-defense capital
goods rose dramatically, the manufacturing sector improved and
unemployment claims fell. Moreover, investor confidence was higher than
it had been in a long time. Why? Because capital was no longer so
expensive.
The Bottom Line
The 2004 Cost of Government Day was July 7^th^. In 2003 it had been July 11^th^.
That is not a huge difference, just 4 days, but those days mean that
the cost of government rose less than the tax revenue. In 2005, it was
July 4^th^. There is the trend. With a prosperity-based tax
code, Americans worked for themselves a little more each year and for
the government, a little less. Public policy, especially as it pertains
to taxation and regulation, has a direct effect on prosperity. The
greater the taxes and regulation, the lower the prosperity. It is a
simple formula that has played out time and again throughout our
history, yet it is a lesson lost on so many.
Consider the preamble to our Constitution:
+We the People of the United States, in Order to form a more
perfect Union, establish Justice, insure domestic Tranquility, provide
for the common defense, promote the general Welfare, and secure the
Blessings of Liberty to ourselves and our Posterity, do ordain and
establish this Constitution for the United States of America.+
It doesn't speak of parties and it has nothing to do with ideology.
It is a simple statement that declares the purposes of government; to
insure justice, peace and safety; to promote prosperity (the general
welfare of the people) and to secure (not obtain, or strive for, but
secure) freedom for ourselves and our descendants.
Is our government doing this? It can be argued that it is doing some
of these things but certainly not all of them and that is where my
problem begins. We are not getting our money's worth and a great many
of those 197 days are simple waste. As long as ideology and political
rivalry hold sway, the good of the people-the general welfare-will
suffer. We have suffered from this in the matter of energy and gasoline
prices, we have suffered in the matter of taxation and until We the
People make our so-called public servants sit up and take notice, our
suffering from their political games will continue.
bureaucrats, technocrats, plutocrats and republicrats that scurry
around the halls of government. That probably explains why the various
branches of the U.S. government get such low confidence ratings while
the military, which thrives on concrete results, is at the top of the
recent 2008 Gallup Annual Update on Confidence in Institutions
poll. However, President Bush has delivered on one thing-he lowered oil
prices by $9.26 per barrel. That is a 6.3% drop on the price of crude
oil for August delivery.
How did he manage it? After months of insanely rising oil prices,
trips to the Saudis to beg for relief, preening and posturing on the
part of congressional leaders and members alike and grade-school style
finger pointing by everyone involved, Bush finally remembered that he
has some power as President and lifted the Executive Order his father
put in place to stop oil exploration and drilling off of America's
coasts. In doing so, he challenged Congress to lift their moratorium
when it comes up for renewal on September 30^th^. As if to
demonstrate the affect that such announcements have on the futures
markets, the price dropped, not after the announcement, but as the President was speaking. Now the ball is in Congress' court.
They are balking now, that is to be expected, but the question is
still open as to whether the Democratic leadership concedes defeat on
what is, for them, an ideological question. The alternative would be
for them to decide that ideology is far more important than the good of
the people and so carry on in the face of hard proof that even
threatening to increase supply will lower prices. You wouldn't think
that was rational, but ideological thinking is not rational. So, what
if they do renew the ban? Will they have enough votes to override a
potential presidential veto? Probably not, but you can never tell.
September 30^th^ is going to be an interesting day.
Still, it does seem to beg a larger question: If it has taken this
long, with so much infighting, and people have had to go to so much
effort, to get these people in Washington to do what is +right for the people+-as
opposed to doing what is good for special interests or upholding a
certain ideology-then why are we paying them so much of our hard-earned
money? Honestly, if the government was a business, they would have
failed a very long time ago.
Cost of Government Day
That question, what are we paying for, is particularly apt today. It is
Cost of Government Day. According to Americans for Tax Reform (ATR),
Cost of Government Day (COGD) is +the
date of the calendar year on which the average American worker has
earned enough gross income to pay off his or her share of spending and
regulatory burdens imposed by government on the federal, state and
local levels.+ That means not just taxes, but the cost or
regulation, the deficit, all the hidden costs of government at every
level. This year, average Americans had to work 197 days just to meet
all costs imposed by the various levels of government. That translates
into government as a whole consuming 53.9% of the American income. In
2007, COGD was July 12^th^. In 2000, it was June 29^th^. To the folks at ATR, it means that the cost of government is rising higher than the national income.
Of course, that is the average American. The fact is that the state
in which you live determines your real Cost of Government Day. July 16^th^ is the overall national COGD, and that is matched by both Illinois and Colorado. If you live in Alaska, your COGD was June 21^st^. Other side of the coin, however is as follows:
Wisconsin -- July 17
Rhode Island -- July 17
Virginia -- July 18
Nevada -- July 19
Hawaii -- July 19
Florida -- July 19
Minnesota -- July 20
Maryland -- July 21
Massachusetts -- July 21
Washington -- July 22
California -- July 23
New York -- July 28
Washington, DC -- July 26
New Jersey -- July 30
Connecticut -- July 31
The COGD Breakdown
The average American's 197 days of government labor-it is really
difficult to think of it as working for yourself-breaks down along
spending and regulatory lines as follows:
83.7 days to pay for Federal spending
41.7 days to pay for Federal regulation
50.5 days to pay for State and Local spending
20.9 days to pay for State and Local regulation
How many more days do you want to work to support government
spending and regulations? The dangers here are in the rising costs of
current programs and regulations and the threat of new entitlements and
additional regulatory burdens. It is estimated, for example, that the
global warming regulations now before Congress, especially the cap and
trade bills under consideration, would add an additional trillion
dollars in regulatory costs.
Soak the Corporations
More regulatory costs? Corporations will pay them, not people! They make money hand-over-fist, so we can soak them!
Not really, you see if American corporations were any more "soaked"
they would begin to dissolve. Corporate taxes in the US are 35%. Add in
State and Local taxes and that means the average corporation here in
the US is facing a 40% tax rate. As of 2007, the average corporate tax
rate was 24%. This is essentially a self-imposed, self-destructive
tariff that hurts our ability to compete on the world market, keeps
these companies from creating jobs and further stimulates the flight of
wealth from the US to foreign countries. As for the thought that it
isn't people who pay for excessive regulations, remember that, as a
point of fact, corporations pay no taxes at all. Their customers do. In
this way, corporations act as tax collectors rather than as tax payers.
Soak business and we just soak ourselves.
An Intelligent Tax Policy
Here, as with the energy question, we return to the shadowlands of
ideology, where class warfare is the order of the day. That has to end.
The United States, as a nation and as a people, cannot afford the
luxury of ideology-driven policies any longer. It is time to see what
has worked for the immediate and overall benefit of the American people
in the past, judge the circumstances of those successes and replicate
them. It doesn't take a complex belief system; just a clear goal and a
mind open to the lessons of history. So, what might these goals be?
Here are a few that might be worthwhile:
Increase government revenues to support public agendas.
Lower energy costs.
Stem the flood of American wealth going overseas.
Increase the amount of foreign wealth coming to America.
Increase investment in American business to create new businesses and new jobs.
How can you reach these goals? You need a tax policy that rewards
success and supports prosperity. From success comes prosperity and from
prosperity comes all sorts of good things like jobs, good wages, high
government revenue and so on. Have we ever had that? Sure, quite a few
times; the most recent being in the 1980s and the mid to late 1990s.
What did these have in common? In both cases, governmental spending was
cut-not just the growth of spending but the spending itself-and taxes
were cut. The result? Deficits dropped or vanished altogether as the
budget came into balance with higher income and lower spending,
business flourished, good jobs were created, wealth came into the
country, energy costs were low. American business was a hot-house of
innovation and the overall standard of living was dramatically raised.
Of course, it wasn't perfect. There were those whose fortunes went
down even as those of the nation as a whole were rising; and there were
those who took advantage of the situation to enrich themselves at the
expense of others. Politicians who were not ideologically comfortable
with the methods used to reach these levels of prosperity took hold of
these issues and the environmental question and did what they could to
raise taxes, increase regulations and, in general, flatten the economic
landscape by "managing" the economy more and more. When that happens,
taxes rise, spending rises, regulation rises and we all spend more days
out of the year working for the government.
Some Specific Ideas
Many of us just got a so-called economic stimulus check from the
Federal Government. That was nice. I am not sure it stimulated much of
anything since so much of it went into the assorted gas tanks of the
American people and to pay debts, such as student loans, owed to the
government. Between that and the energy taxes the Feds impose, I am
sure that Washington has gotten a lot of it back by now.
The point is that in spite of the pleasure we get from receiving a
check from the government-as opposed to writing one to the IRS-such
cash grants are very short term solutions to our economic woes at best,
and fully useless at worst. Either way, they are not what we need to
stimulate the economy. What we need is something we have not had since
the income tax was written into the Constitution: A good,
prosperity-oriented tax system.
There are many ways taxes can be reformed, from a simple flat tax to
the so-called Fair Tax to something that may still have so-called
progressive elements in it and yet serve to stimulate the economy
rather than drag it down. The truth is that both the flat tax and fair
tax are long shots. They don't seem to redistribute enough wealth for
some politicians and they eliminate government's ability to do special
favors through the tax code. After all, a 17% flat tax with no
deductions or credits is not much to work with when you want to reward
a major campaign donor. So, it is likely that some sort of graduated
tax scheme will persist. History tells us that any reforms that are
made to such a system have to reduce the cost of capital.
History Lesson: America, 2003
The Bush tax cuts were tiny compared with those of Ronald Reagan and
John F. Kennedy, yet like their predecessors, they still had a major
effect. By October, 2003, the Bureau of Labor statistics reported that
more Americans were employed than ever before. This period also marked
an increase in business investment. Orders for non-defense capital
goods rose dramatically, the manufacturing sector improved and
unemployment claims fell. Moreover, investor confidence was higher than
it had been in a long time. Why? Because capital was no longer so
expensive.
The Bottom Line
The 2004 Cost of Government Day was July 7^th^. In 2003 it had been July 11^th^.
That is not a huge difference, just 4 days, but those days mean that
the cost of government rose less than the tax revenue. In 2005, it was
July 4^th^. There is the trend. With a prosperity-based tax
code, Americans worked for themselves a little more each year and for
the government, a little less. Public policy, especially as it pertains
to taxation and regulation, has a direct effect on prosperity. The
greater the taxes and regulation, the lower the prosperity. It is a
simple formula that has played out time and again throughout our
history, yet it is a lesson lost on so many.
Consider the preamble to our Constitution:
+We the People of the United States, in Order to form a more
perfect Union, establish Justice, insure domestic Tranquility, provide
for the common defense, promote the general Welfare, and secure the
Blessings of Liberty to ourselves and our Posterity, do ordain and
establish this Constitution for the United States of America.+
It doesn't speak of parties and it has nothing to do with ideology.
It is a simple statement that declares the purposes of government; to
insure justice, peace and safety; to promote prosperity (the general
welfare of the people) and to secure (not obtain, or strive for, but
secure) freedom for ourselves and our descendants.
Is our government doing this? It can be argued that it is doing some
of these things but certainly not all of them and that is where my
problem begins. We are not getting our money's worth and a great many
of those 197 days are simple waste. As long as ideology and political
rivalry hold sway, the good of the people-the general welfare-will
suffer. We have suffered from this in the matter of energy and gasoline
prices, we have suffered in the matter of taxation and until We the
People make our so-called public servants sit up and take notice, our
suffering from their political games will continue.
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