This year, Cost of Government Day fell on July 12. Cost of Government Day is, according to Grover Norquist, "[the] date in the calendar year when the average American worker has earned enough money to pay off his or her share of the burdens of spending and regulations at all levels of government. This year, Cost of Government Day is one day above 2005 levels and nearly twelve days higher than in 2000."
One could also, were one inclined to take Gus Van Horn's recommendation, investigate this view, in which a Boston University professor argues (in a paper for the Federal Reserve Bank of St. Louis) that the U.S. government is already bankrupt:
"The U.S. government is, indeed, bankrupt," he writes, "insofar as it will be unable to pay its creditors, who, in this context, are current and future generations to whom it has explicitly or implicitly promised future net payments of various kinds."While the U.S. budget deficit, currently forecast to be 2.3 percent of the gross domestic product this year, is smaller than that of most European states, Kotlikoff argues the much debated number is not a particularly useful measure of U.S. economic health.
"The proper way to consider a country's solvency is to examine the lifetime fiscal burdens facing current and future generations. If these burdens exceed the resources of those generations, get close to doing so, or simply get so high as to preclude their full collection, the country's policy will be unsustainable and can constitute or lead to national bankruptcy.
The number that has Kotlikoff's attention is the U.S.'s long-term "fiscal gap" – the difference between all future government spending and all future receipts. Not only is the number immense, it will grow wider as the Baby Boom generation leaves the work world – and the burden of paying taxes on earned income – and stakes its claim on government health care and pensions. According to one study, the total fiscal gap could be $65.9 trillion.
"There are 77 million baby boomers now ranging from age 41 to age 59," Kotlikoff writes. "All are hoping to collect tens of thousands of dollars in pension and healthcare benefits from the next generation. These claimants aren't going away. In three years, the oldest boomers will be eligible for early Social Security benefits. In six years, the boomer vanguard will start collecting Medicare. Our nation has done nothing to prepare for this onslaught of obligation. Instead, it has continued to focus on a completely meaningless fiscal metric – 'the' federal deficit – censored and studiously ignored long-term fiscal analyses that are scientifically coherent, and dramatically expanded the benefit levels being explicitly or implicitly promised to the baby boomers."
As if that weren't enough, remember what else your Congress is spending money on: establishing and securing the Islamic Republic of Afghanistan, for one thing. Pretty proud of that one, aren't we? And, of course, the House of Representatives recently voted, 317 to 93, to protect you from Internet poker.
Remind me again why we want Republicans controlling the House, the Senate, the courts, and the executive branch?
Posted by Craig Ceely at July 17, 2006 08:42 AM