By Kerry Lynch, director of research, American Institute for Economic Research - 05/19/08 05:34 PM EDT
The late Nobel economist Milton Friedman once remarked that he would rather have government spend $1 trillion with a deficit of a half-trillion than $2 trillion with no deficit.
His point was that the focus on budget deficits masks a larger issue: the total cost of government.
The Tax Foundation estimates how many days each year Americans must work to pay federal, state and local taxes — assuming every penny of income earned until then is used solely for that purpose. The group calls this Tax Freedom Day, which arrived this year April 29.
For a more accurate assessment of the total costs of government we calculate Friedman Day, or the day when Americans have earned enough money to pay for everything that federal, state and local government will spend on during the current year. Friedman Day this year was Monday, May 19.
Tax Freedom Day is indeed useful to illustrate the tax burden — and has shown consistently in recent years that Americans (although individual circumstances vary widely) spend more of their time working to pay taxes than they do to pay for food, clothing and housing combined.
But current taxes represent only a portion of government’s cost.
Other costs are being deferred — passed on to future generations through government borrowing and the accumulation of IOUs in nonexistent “trust funds,” such as the Social Security trust fund.
Though making such calculations is an inexact science, our most recent Friedman Day breakdown of federal spending shows that the typical American works more than 17 days each year to pay for Social Security, just under 17 days to pay for national defense, nearly 11 and a half days to pay for income security programs (including food stamps, Supplemental Security Income and welfare), nearly 11 days for Medicare, more than eight days for Medicaid and other government health programs, seven days for interest on the national debt, three for education, and just over 11 days for everything else, including transportation, the courts, foreign aid, farm subsidies and congressional and White House salaries, benefits and overhead costs.
The three-week gap between Tax Freedom Day and Friedman Day is the burden today’s politicians pass on to future taxpayers.
Great Barrington, Mass.
Ill-advised action on customs policy
From Larry Ordet, private-practice trade and customs attorney, former U.S. Customs and Border Protection attorney
Your article “Retailers harvest victory in farm bill” (May 14) details Congress’s clear message to U.S. Customs and Border Protection regarding the agency’s proposed nullification of 20 years of judicial precedent relating to a method of valuing merchandise entered into the United States, referred to as “First Sale.” Congress has stated loudly and clearly that it doesn’t like what CBP has done and doesn’t like the way the agency went about doing it.
In the article, CBP’s proposal is described as a “rules change.” This description significantly understates CBP’s action. This “rule” has been consistently approved by federal courts — and consistently followed by CBP — for the past two decades. Arguments now raised by CBP to support its proposal were made and rejected in the early ’90s. CBP’s present action is an overreaching attempt by the executive branch to overturn decisions by the judiciary.
The article paraphrases a CBP spokeswoman, who suggests “the change would make the U.S. consistent with other World Trade Organization members.” Does CBP believe that international harmony should be paramount in interpreting U.S. law? Moreover, CBP fails to mention that important U.S. trading partners, including the 27 European Community countries, support First Sale. Thus, the change would make the U.S. inconsistent with other WTO members.
Finally, regarding the statement by American Manufacturing Trade Action Coalition that “the First Sale rule is … virtually impossible to administer,” CBP’s practice and statements make it clear that this claim is incorrect. For 20 years, CBP has successfully, and without complaint, administered First Sale. In fact, CBP has suggested that First Sale was not difficult to administer.
It is hoped that CBP heeds this strong bipartisan message from Congress and withdraws its ill-advised, ill-timed proposal.