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Trivia Tidbit Of The Day: Part 432 -- Tax Freedom Day

Taxes Creeping Ever More Into Our Lives-

The Tax Foundation has released its annual report on Tax Freedom Day, the day that Americans can stop working to pay their taxes and start working to pay themselves (.pdf):

Of course, some states have exorbitant local taxes (income taxes, for example), some don't. Thus, in Oklahoma and Alabama, Tax Freedom Day is April 12. In Connecticut, it's May 20.

Regardless, the recent trend is not good. Taxes are already too burdensome as it is, yet Democrats in the House of Representatives just passed a gigantic tax hike. See yesterday's Trivia Tidbit for more on that.

Not only that, but there's no reason to raise taxes. We're on track for Federal Budget surpluses without any tax increases, sometime next year. The government has plenty of revenue. It's spending that is unsustainable. So, where is that additional spending, relative to the year 2000, coming from?

Well, some of it is due to national defense, the war on terror, and specifically the military operations in Afghanistan and Iraq. A microscopic amount, in relative terms, is due to pork and other non-defense discretionary spending. The bulk of increased spending since 2000 comes from Social Security, Medicare, and Medicaid-- entitlements. And most of that increased Medicare spending came BEFORE the Prescription Drug Benefit ever took effect.

In other words, autopilot spending is responsible for most of the big spending increases over the past several years. Secondarily responsible: the end of the false "peace dividend" of the 1990s following the collapse of the Soviet Union. It's possible to envision a time over the next few years when the United States is not spending nearly as much on national defense. It might not produce the full-blown peace dividend of the 1990s, but spending on national defense, as we've seen this past week with the shenanigans surrounding the defense supplemental bill in Congress, is not on auto-pilot.

Way down the line on the spending ladder, meanwhile, is pork.

Pork and much of the other non-defense discretionary spending is bad for its own sake. It tends to corrupt. It distorts market behaviors. It elicits rent-seeking behaviors. It is why there are so many lobbyists in this country. There are all sorts of reasons to eliminate the entire earmarking process in Congress, but if we're ever going to get serious about big government spending, it starts and ends with entitlements.

Only Social Security reform, followed by Medicare and Medicaid reform, will set America's longterm fiscal ship back on course.

Previous Trivia Tidbit: The Largest Tax Increase In History.

Posted by Will Franklin · 30 March 2007 11:52 AM

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