Debt Free

It's July 21^st, YaHoo! No, not the Internet giant. It's the feeling of jubilation felt because we're past Cost of Government Day. In Washington State, where I live, that day is today. Unlike Tax Freedom Day, Cost of Government Day includes all costs of government, both taxes and regulatory. The term was coined by the organization Americans for Tax Reform. Sadly for me, Washington State, my current state of residence, is behind only three other states. Nationally, the average for Cost of Government Day was July, 12^th, .

Although it moved steadily earlier for almost a decade, the COGD has been trending later since the late 1990's. Last year's Cost of Government Day was, appropriately enough, July 4^th. The main culprit is government spending that keeps going up like some sick express elevator. Didn't the Elephants used to mean smaller, leaner government and lower government spending? I know we're fighting a war, but come on! Combined spending for the Iraq and Afghanistan actions only comprise about .8% of the GDP. All of the increase can't be logically blamed on them.

Although they claim to be keeping a lid on government spending, the Republicans can only claim this in the context of spending as a percentage of GDP, although this is showing signs of improvement lately. Growth in discretionary government spending was only about 1% last year, according to the Office of Management and Budget (OMB). Contrary to what the Donks would have you believe, the economy is actually fairly robust, and has been recovering nicely over the last couple of years. The strong recovery has led to a rise in GDP, and thus, tax revenues. This tax revenue occurs despite, and to some extent is fueled by, the cuts in the tax rate implemented by President Bush.

The budget deficit was $521 billion for 2004. This was 3.6% of the GDP. So, although Congress and the Bush Administration have been spending money with the enthusiasm of a frat boy in a beer garden, the deficit as a percentage of the GDP has actually been decreasing of late. Watch out if the economy takes a turn for the worse, as could be the case if the trouble in the middle east grows more serious. That would cause tax revenues to plummet and deficits to soar. Time to do some praying for the situation to improve over there.

Although the cost of the federal government makes up the lion's share of the COGD, state and local governments contribute as well. They contribute 40 days or so the the calender position of the day. Washington State and its most populous county, King County are notoriously expensive governmentally, never finding a regulation they don't like. That's a major component of the state's placement so deep into July. With a little luck, some restraint, and possibly some real creative governing, maybe we could pull an about face and move the COGD into June. It'd be something to shoot for.