Cost of Government Day

Every year, Americans for Tax Reform Foundation publishes its Cost of Government Day report, which calculates the day on the calendar year until which the average American must work to pay for the full costs of government spending and regulation. Highlights of the report are as follows:

- This year, Cost of Government Day fell on August 12, meaning Americans labored a full 224 days into the year to pay for local, state and federal government spending and regulations.

- Americans have lost 29 days of the calendar year thanks to Obama's overspending and regulatory zeal -- 2011 marks the third straight year Cost of Government Day has fallen in August. Prior to the Obama administration, it had never fallen later than July 21.

- The effects of the bailouts and failed stimulus plan are still being felt by Americans, who must work a full 103 days to pay for the costs of federal spending.

- Americans spend 44 days working to pay off state and local government spending.

- Americans are forced to labor 77 days to pay for total federal regulations, a workload that will increase exponentially with the implementation of the Dodd-Frank financial regulatory bill and Patient Protection and Affordable Care Act.

The report also measures varying government burdens in each state to calculate their respective state Cost of Government Day. As in past years, taxpayers in Connecticut must work the latest, laboring all the way until September 10 to pay off the full costs of government. Taxpayers in Mississippi worked the shortest amount of time to pay off their burden off government, laboring until July 19.

Source: "2011 Cost of Government Day: August 12," Americans for Tax Reform, August 12, 2011.

For text:
http://www.atr.org/cost-government-august-a6400

For study:
http://www.costofgovernmentday.com/

The Facts about Spending Cuts, the Debt and Gross Domestic Product

Summation: spending is the root of power; the desire for power is what drives free-spending politicians - no matter what else anyone says...

The Facts about Spending Cuts, the Debt and Gross Domestic Product Veronique de Rugy, a senior research fellow at the Mercatus Center at George Mason University, discusses the facts and myths surrounding spending cuts, the debt and gross domestic product (GDP).

Myth 1: You cannot reduce the deficit to an appropriate level without also raising taxes.
Fact 1: Spending cuts are the most effective way to reduce the debt-to-GDP ratio.
Harvard's Alberto Alesina and Silvia Ardagna examined 107 efforts to reduce the debt in 21 Organization for Economic Cooperation and Development nations between 1970 and 2007; their findings suggest that tax cuts are more expansionary than spending increases in the cases of a fiscal stimulus.
Also, they found that spending cuts are a more effective way to reduce the debt-to-GDP ratio.

Myth 2: Lawmakers facing economic catastrophe forget about politics and adopt measures that address genuine fiscal issues.
Fact 2: Politicians rarely put politics aside.
A recent paper by Andrew Biggs, Kevin Hassett and Matthew Jensen of the American Enterprise Institute shows that even in a time of crisis (or especially in a time of crisis), lawmakers tend to adopt policies for the sake of politics.
Countries in fiscal trouble generally got there through years of catering to interest groups and pro-spending constituencies (on both sides of the political aisle), and their fiscal adjustments tend to make too many of the same mistakes

Myth 3: We have had higher debt-to-GDP ratios before so we shouldn't worry now.
Fact 3: We should worry -- the debt-to-GDP ratio actually underestimates the size of the government's real liabilities.
History appears to be reassuring, since several advanced countries have had debt-to-GDP ratios much higher than the one we have now without defaulting, so why should we worry? Two main reasons: First, while our debt is big now, it's only going to get bigger in the coming years. Second, the debt-to-GDP ratio actually underestimates the scale of our debt problem because of intragovernmental debt, unaccounted liabilities and unfunded liabilities.

Source: Veronique de Rugy, "The Facts about Spending Cuts, the Debt and the GDP," Reason Magazine, July 29, 2011.

For text:
http://reason.com/archives/2011/07/29/the-facts-about-spending-cuts

curve movement

A very interesting thing is happening to the yield curve as we move to our 'default with destiny'....
The yield curve has actually 'slid' all the way out the curve and the 10 yr treasury is bouncing on recent new lows...
So, what comes first - the debt debacle's unending story or the economic morass that plagues us?