Tag Archives: Cost of Government Day

28 Years Ago The Economy Recovered By Giving Freedom A Chance

Bookmark and Share   Last week marked the 28th anniversary of Ronald Reagan’s signing of the 1981 Economic Recovery Tax Act. When it comes to the economic recovery methods that we have adopted b.govtoday,  it is appallingly easy to see that we our government has lost its way since then.
 
The approach to government that Reagan instilled in the conduct of contemporary conservative governance was basic. It was rooted in the belief that the engine which propelled America’s greatness was not government but the nation’s people.
 
It was centered around freedom and the allowance for the natural progression of freedom and the free market to grow our economy, spread wealth and create a sustainable prosperity for all.
 
The Economic Recovery Tax Act of 1981 was an implementation of that thinking, which reduced tax rates and unleashed one of greatest economic recoveries our nation has ever seen. It eventually brought unemployment down from a high of 10.6% to 5.4% and drastically eliminated inflation. With consumer prices at the highest peacetime rate on record-up 13.3 percent in 1979, three years later, the rate of inflation had slowed considerably, with the Consumer Price Index advancing only 3.8 percent during that same year and from there on throughout the rest of the 80’s and 90’s the actual inflation rate remained well below 5%.
 
That whole process is in stark contrast to the economic recovery acts that we saw our government begin to practice in 2008 and repeat in 2009.
 
Those recovery acts deceptively added the word reinvestment to them and decidedly rejected the successful thinking behind the 1981 measure designed for the same purpose that the most recent bills were.
 
The newestt recovery measures taken were nothing more than a bid for more government and a grab at more centralized government that initiated unfunded mandates and essentially took more money away from the people rather than afford them the chance to keep more of their money.

The modern recovery acts were designed to create more jobs and spur more spending. Yet to date, with less than 10% of the monies slotted for these initiatives spent and the bulk of it not expected to be allocated for years to come, little benefit has actually been seen. And the fact of the matter is that in the end little will be seen.

With only a fraction of the stimulus money having been spent to date, a recent poll determined that 72 percent of Americans want the unused portion of the $787 billion dollar stimulus package returned to taxpayers. They believe it would do more to boost the economy than having the government spend it. That sentiment runs deep through out society as a 59% majority of Democrats, 87% majority of Republicans and 70% majority of independents believe that the money should be returned to taxpayers. This was the same Reagan thinking and policy that allowed for the recovery that we saw in the 80’s.

In all honesty, when you look at a major goal of the recent recovery act, you will see that is the creation of jobs. But the package only creates government jobs. By nature, government jobs do not sustain themselves. They do not create a market which produces a profit that generates a self funding source for themselves. They are funded through taxes. But in addition to the need for a continuous stream of tax dollars to finance these government jobs is the problem that the jobs created by these modern recovery attempts are only temporary.

The work that will be created through the bills are have no enduring future. For instance, once a road is built, it is done. Maintenance for that road will always be required but that alone does not employ the number of workers required to build that road originally.

This is just one example of what may produce a positive effect but will assuredly only be a temporary effect from the most expensive pieces of legislation in history. Ultimately the recent stimulus packages are legislative creations which simply have no long term benefits. But they will have damaging long term effects induced by the ensuing debt that these most recent recovery packages create and the tax burden that their debt will inevitably produce.

Conversely, the recovery act that people like Congressman Jack Kemp and Senator William Roth were responsible for developing was  a stimulus package that allowed for the people to posses more money and it allowed for them to spend more and invest more. All of which energized an entrepreneurial revival that created more self sustaining, permanent jobs and more investment.  All of which spurred a natural cycle of sustainable growth that did not rely on government spending and federal taxation.

28 years later and intermittent failures to acknowledge the success of this thinking at the federal level continues to threaten our economic stability and jeopardizes the freedom based fabric of our American future.

On the day before the anniversary of Ronald Reagan’s signing of the successful recovery measures that we took in 1981, The Center for Fiscal Accountability released it’s annual report which provides evidence to my claim.

The report demonstrated that the average American devotes 224 days of work a year to simply cover the costs of government mandated programs and controls and that the federal government demands approximately 61½ % of our combined national income.

That’s far more than half of what we earn.

The number of days that Americans must work to cover this cost of government allows The Center for Fiscal Accountability to establish what they call Cost of Government Day.  Based on a national average that day for all Americans was August 12th.  That is 26 more days than least year. And it means that when you come down to it, you worked the first 8 months and twelve days of the year to fund the government. 

But if you want an even greater example of just how burdensome and oppressive the crushing costs of government can be, lets take a look at my home state of New Jersey.

While the 2009 national average for the Cost of Government day falls on August 12th, for New Jerseyan’s the Cost of Government Day falls on September 6th, 25 days later than the national date.

One of the state’s few true conservative leaders, State Assemblyman Jay Webber stated that “Since 2002, the average family of four in New Jersey has seen a state tax increase of more than $10,000, a wallop to the wallet by far the worst in the entire nation. The state’s citizens have been saddled with a cumulative tax increase of $21.2 billion from FY2003 to FY2009. We have experienced 108 new or increased taxes in just 8 years—on income, sales, estates, employees, employers, home sales, televisions, phone bills, motor vehicles, tires, and many more items. And that does not even count the state’s record-setting property taxes, which have skyrocketed 54.8 percent since 2002 and amount to $6,500 per household. New Jersey collects more property taxes per capita than any other state.

All of this is a direct result of increased government programs and an increased size of government. It demonstrates that more government is not the answer and that a growing bureaucracy does little to solve problems but much to create more problems and expenses.

But New Jersey is not the state with the latest Cost of Government Day. Connecticut has the latest date, surpassing New Jersey by one day. Behind New Jersey is New York, August 31st (243 days out of the year), followed by California, August 23rd, (235 days) and the fifth worst is Maryland, August 21st, (233 days).

When looking at these states you will find a direct correlation between their overregulation, social engineering programs and high costs of living but you will not find a connection between those characteristics and booming business environments, high employment, government efficiency and a quality of life significantly superior to anywhere else. What that means is that despite all their regulation, government provided services and taxes and fees in these five states, Americans still have no good reason to want to live in them.

In fact in New Jersey it is just the opposite. People are fleeing the Garden State to find jobs, affordable homes and bearable tax rates that will allow them to live comfortably and with a sense of freedom.

All of this makes one wonder whether or not we should really be trying to establish such things as government controlled healthcare. It also makes us question how wise it was to create an economic recovery that throws more and more money into what apparently is responsible for holding the economy and taxpayers back…….government.

The Kemp Roth Economic Recovery Tax Act of 1981 that Ronald Reagan championed, worked twenty eight years ago. It invested in the people and our entrepreneurial spirit. But the so called recovery and reinvestment act of 2009 is far different. It takes money and control away from the people and invests it in government.

The Obama administration may call it “reinvestment” but by all proven standards, I call it a bad investment.

Take a moment to watch the video below of the fateful moment 28 years ago when Ronald Reagan signed the economic recovery package that brought us out of economic despair.  Hear in his own words the keys to its success

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