Report: Cost of Government Rising Faster Than Cost of Housing and Healthcare

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Here’s a new story that, at first blush, appears to be merely another reminder of what we already know: government is involuntary, inefficient, insulting, unresponsive, lacks competition, and constantly tells us how quickly its costs go up.

But on deeper examination, we see clear principles that are important to recognize, because they’re eternal; they’re axiomatic, and tell us why it’s important to get government out of our lives.

Bradley Thomas, of the Mises Institute, just mentioned the new Tax Freedom Day report from the Tax Foundation, a report that tells readers that the average American will work for 105 days, or nearly one-third of the year, to pay his or her “share” of total taxes claimed by the various government parasites in this so-called “Land of the Free.”

That lands us US tax slaves in April – April 16, to be precise – before we are free to toil for anything other than our feudal government overlords.

It also means:

In 2019, Americans will pay $3.4 trillion in federal taxes and $1.8 trillion in state and local taxes, for a total bill of over $5.2 trillion, or 29 percent of the nation’s income.

Which indicates something very important. The feds and most states are in massive debt. So behind all those numbers are all the future souls who will be born into government tax slavery to pay off programs that contemporary politicians impose on them.

In fact, the Tax Freedom Day team acknowledge precisely that on the federal side (sans the state debts):

If you include annual federal borrowing, which represents future taxes owed, Tax Freedom Day would occur 22 days later, on May 8.

How that equates to anything remotely like freedom is anyone’s guess.

And Thomas at Mises and the folks at the Tax Foundation offer readers another important learning tool. Noted in the report is the fundamental difference between government costs and what happens in a market, especially if the market is left alone and free or regulations, subsidies, and the price-increasing tendencies of money supply inflation. Check this out:

Americans will collectively spend more on taxes in 2019 than they will on food, clothing, and housing combined.

Citing an excellent graph to visualize the numbers, Thomas observes:

(N)ominal per capita federal receipts ballooned by 122 percent between 1993 and 2018, while nominal per capita federal government outlays climbed by an even more dramatic 132 percent. Compare this growth rate to the cumulative growth rate of the Consumer Price Index (CPI) – a measure intended to reflect the overall cost of living for the average citizen – of 73 percent during that time.2 In other words, the cost of the federal government to citizens grew at a rate two-thirds faster than the overall price index.

Sixty-six-point-six percent faster.

An appropriate set of digits, perhaps.

And valuable not only in its shocking size, but in opening a door to a big takeaway to remember.

As I’ve noted for the Mises Institute, and as has been beautifully covered in the excellent book, “Less Than Zero”, written by George Selgin, and published by the Institute for Economic Affairs, in London, if the Federal Reserve and the US government kept their hands off the creation of money (if the Fed didn’t do it, the US Treasury would, so don’t think that by eliminating the Fed America would see an end to the inflation of the money supply), the general trend for market prices would be down, and this is a great goal to seek.

The reason prices would trend downward, as Selgin notes, is because producers strive to give consumers what they want, and consumers want to get more for their efforts, not less. As a result, competitive sellers work to beat each other to the consumer’s favor, and work to be more productive, offering more for less. Prices drop. Formerly expensive items fall in price to the point where even people who are considered poor in the US have more goods and better living standards than the richest kings of days gone by, and their living standards are far, far better than those of the poor in most other nations.

In a healthy economic system free from government control of money and free from government-granted monopolistic control of the money supply in the form of the Federal Reserve, prices drop. Instead of spending quickly to avoid the inevitable price increases caused by government-connected inflation of the money supply, people save, and those saves are lent out by banks at natural interest rates, not government-created or government-favored rates thought up in the heads of central bankers.

So those price increases noted in the report? If the market were left free of government debt, government spending, government regulations, government handouts that drive demand artificially (as with college loans) higher, normative price increases will not only be far lower than government increases, there will be a general trend in favor of “lowerer” prices! Pretty cool!

On the flipside, we have what we know about when it comes to government. The state has absolutely no incentive to cut spending and expenses, because politicians generally are elected based on the handouts they promise. The rare exceptions have been people like Ron Paul, who acknowledged that not only did the US Constitution not allow all of the pork projects and “bailouts” and regulations that keep Washington politicians in power and drive people to try to beg them for handouts, but those expenditures syphon away useable capital from ventures we, real people, could choose.

Those are ventures that we could deem valuable. Yet they will never be seen, because politicians steer our choices away, take our money and the cash of our children, and tell us it’s “good”.

The numbers don’t lie. Economics is simple.

While leftists (and even so-called "moderates") push for more government involvement in medicine and hanouts for housing, we can see how those services and products can best be brought into the realm of affordability.

And we can see the key axiom: Government is a parasite which cannot control its expenses, because it has incentives to keep spending and taxing and borrowing and taxing—

Forever.

 

(Cover Photo: Altered picture from 401kcalculator.org)

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