Cost of Government Day (COGD)
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The Government Spending Burden

Federal Spending

Federal spending continues to be the single largest component of the total cost of government, and the main driving force leading to the substantial increase in the cost of government over the last eight years.  In 2008, the average American will have to work 83.7 days just to pay for the cost of federal spending, which will consume 22.9 percent of national income this year.  This is a jump of over five days compared to 2000, due to the growth in federal spending relative to national income alone.  Federal spending relative to the economy has increased 11.4 percent since 2000.

In contrast, despite the national defense buildup that resulted in the collapse of the Soviet Union, President Reagan still led a reduction in federal spending from 1982 to 1989 of close to 10 percent relative to the economy.  Former House Speaker Newt Gingrich spearheaded spending restraint that led to a reduction in federal spending relative to the economy of 12.4 percent from 1994 to 2000.

Days Worked for Federal Spending

This sharp increase in federal spending burdens over the last eight years is compounded by the continuing efforts of those who want to increase federal spending even faster.  The new Democrat Congressional majorities tried to add to President Bush’s proposed 2008 budget sharp increases in domestic discretionary spending that amounted to only $22 billion in the first year, but would have ballooned to almost half a trillion dollars over the 10 years.  The bloated $300 billion farm bill passed by Congress over President Bush’s veto is another example of Congress’s growing propensity to increase federal spending.

But this year’s spending increase is just a warm up for those who want to add new entitlement programs, even while our current entitlement programs portend a tsunami of future federal spending that will swamp the fundamentals of our economic system without basic reforms.

President Bush proposed an increase of 20 percent over the next five years for the State Children’s Health Insurance program (SCHIP).  Senate Democrats wanted to double SCHIP spending from $25 billion to $50 billion, and House Democrats wanted to even triple it to $75 billion. While President Bush vetoed the SCHIP bill passed by Democrat majorities, and spending was held at the level originally requested by the President, this debate is unlikely to go away.

One of the biggest dangers to fiscal restraint comes in the form of a push for the
biggest new entitlement of all, national health insurance.  Enacting a system of socialized medicine alone could increase total federal spending by close to $1 trillion per year, about one-third of the entire federal budget.

This added burden would be on top of the already unmanageable future costs for current entitlement programs.  That long term problem, and free market solutions for it, is discussed in a Special Focus section later in this report.

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