Cost of Government Day: July 13, 1993

If it seems like you've been working longer and harder to pay your bills and make ends meet in recent years, it's not your imagination playing tricks on you.

The Tax Foundation calculates that if every dollar of earned income starting January 1 went to federal, state, and local governments, the average American would not have earned enough to pay his or her 1993 taxes until May 3--the date the foundation calls "Tax Freedom Day." In 1985, Tax Freedom Day came four days earlier--April 30.

Even that is not the full story, because it counts only direct taxes. Governments are making increasing use of hidden ways to "tax" citizens, with mandates and regulations. Adding those into the equation produces a date Americans for Tax Reform calls "Cost of Government Day." It's not May 3. It's not even in June.

Cost of Government Day in 1993 will fall on July 13, a full 10 days later than in 1985. That means that the average American spends over half his time laboring to pay the total price tag for government spending and regulations.

In the past five years, Congress has presided over a regulatory explosion. The number of pages in The Federal Register--where new federal regulations are catalogued--has risen to over 65,000 from 47,000 in 1985. Chicago economist Robert Genetski has estimated the cost of the Americans with Disabilities Act alone at $20 billion per year, approximately $80 for every man, woman, and child in the United States.

For the country as a whole, a conservative estimate of the total cost of federal regulation is $619 billion, or about $2,500 per person. Lawmakers seem oblivious to the fact that as these regulatory bills rise, so must prices, layoffs, or even bankruptcies. Wages also fall, or rise less than they would have in free and competitive markets.

When regulations enhance competition, protect individual rights, promote safety, strengthen the sanctity of contracts, or provide information necessary in the marketplace, they can yield a positive good. But thousands of pages of regulations later, it's difficult to imagine that Americans are all that much better off than they were a decade or so ago. In any event, our lawmakers focus most of their attention on regulation's perceived benefits and very little on its real economic harm.

These days, Congress not only tells private enterprise how to run its business with increasing frequency, but it is imposing ever higher costs on state governments as well. Unfunded mandates from Washington--requiring states to expand or create programs and pay for them too--are soaring in volume and cost. A recent Mackinac Center study found that $95.3 million--the equivalent of one-third of Michigan state government revenue growth in the 1992-93 fiscal year--will go to pay just the cost of federal mandates in one program alone, Medicaid.

Had Congress been paying attention to the cost of government and the plight of millions of struggling American workers, the depth and length of the recession could have been reduced. Many economists argue persuasively, in fact, that the huge tax hikes of 1990--occurring after President Bush abandoned his solemn "no new taxes" pledge--were the main reason the recession happened in the first place. Since 1989, the total cost of government has skyrocketed from just over 48 percent of national income to more than 53 percent in 1993.

For a household with an annual income of $30,000, that translates into an additional burden of $1,500 in higher taxes and regulatory costs. Money which could have been used by its original earners to buy goods or services or for personal saving was instead siphoned off to fuel the growth of government.

As massive tax hikes take shape in Washington, Americans ought to contemplate what government is costing them already. July 13--Cost of Government Day--should remind us that a government that is big enough to give us everything we want is also big enough to take away everything we have.