Out of Control Policy Blog

Happy Cost of Government Day, California!

My fellow Californians will be happy to know that they are now finally working for themselves this year, and not the government. According to a new report from Americans for Tax Reform, California's "Cost of Government Day," the day the average worker has earned enough to pay off the spending and regulatory burden of government at the federal, state, and local levels, fell on August 18.

That's 230 days Californians had to work this year just to pay the cost of government. Moreover, state taxpayers had to endure cumulative tax increases of about $34.4 billion over the last ten years, or $924 for every man, woman, and child in the state. This accounting of both spending and regulatory burdens gives an even more complete picture of the true cost of government than the Tax Foundation's Tax Freedom Day report, which is also excellent but focuses solely on governmental tax burdens. (See my previous post  on California's Tax Freedom Day—April 16 this year—here.)

California's Cost of Government Day falls six days later than the national average (August 12), making it the 43rd-worst of the 50 states and the District of Columbia. Nationally, the average American worker had to work 103 days to pay for federal government spending, accounting for 28.2% of net national product, 50 days to pay for federal regulations (13.6% of net national product), 44 days to pay for state and local spending (12.1% of net national product), and 27 days to pay for state and local regulations (7.6% of net national product).

The combined regulatory burden has increased nearly one-third (31.6%) in just the last decade. Government regulation is strangling economic activity, which is always a bad thing, but especially so during a time of economic recession or stagnation. As the ATR report noted, an April 2011 Phoenix Center study estimated that shrinking regulatory agency budgets by 5% would increase GDP by $376 billion and increase employment by 6.2 million over a five-year period. That study also concluded,

On average, eliminating the job of a single regulator grows the American economy by $6.2 million and nearly 100 private sector jobs annually. Conversely, each million dollar increase in the regulatory budget costs the economy 420 private sector jobs.

But why stop at a measly 5%? Why not throw off the shackles of regulation in a real significant way—say, a cut of 40% or 50% (or 100%—I can dream, can't I?)—and really allow the engine of free-market capitalism to start humming once again?

On his fantastic TV show "Freedom Watch" on the Fox Business channel, Judge Andrew Napolitano is fond of posing the rhetorical question, "Does the government work for us, or do we work for the government?" As the ATR report demonstrates, the sad truth is that we work for the government—to the tune of more than 60% of our labor and productivity. Thus we are more slaves to our government than free from it. No wonder our economic and fiscal/debt situations are so dire. It will only be when we take an axe to the size and scope of government and regain control of our private and commercial freedoms that we will be able to blaze a trail to a more stable and prosperous future.

Adam Summers is Senior Policy Analyst


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