Cost of Government Day Arrives on July 6 in 2014

Each year, the Cost of Government Center, in partnership with Americans for Tax Reform Foundation, calculates the Cost of Government Day. This day marks the point during the year when the average American has earned enough income to pay for his or her share of the spending and regulatory burdens imposed by government at the federal, state and local levels.

This year, the Cost of Government Day (COGD) falls on July 6. This means that Americans have to work 186 days out of the year in order to meet the costs imposed by the government. This will be the sixth consecutive year that COGD occurs in July. Before Obama took office in 2009, the latest calculated Cost of Government Day fell on June 27.

The total cost of government in 2014 is 51 percent of the annual Gross Domestic Product (GDP). This year, Americans had to work 121 days to pay for total spending, which made up 33 percent of GDP.  Americans worked 81 days to pay for federal spending and 40 days to pay for state and local spending. To pay for regulatory costs, Americans had to work 42 days to meet federal regulations and 23 days to meet state regulations. In total, regulatory costs amount to a full 17 percent of GDP. 

Our conservative estimate of total regulatory costs only takes into account the cost of complying with regulations. The estimate does not include the deadweight loss, or foregone goods and services that result from regulatory burdens. If these negative economic effects were taken into account, the costs would be much higher when taking into consideration the opportunity cost of these government policies.

There are people in many states this year that must work past national COGD in order to pay for the costs of their state governments. Taxpayers in states like California, New York and New Jersey must work one to two weeks longer than the national COGD in order to meet the high tax, spending and regulatory burdens imposed on them at the state level. Connecticut has the latest COGD, with workers toiling up to July 26 to pay for their state government. 

States where lawmakers focus on mitigating the tax and spending burden tend to have earlier Cost of Government Days. According to an analysis by Americans for Tax Reform, in states where Democrats have control of the governor’s mansion and both chambers of legislature, total expenditures have increased by 5.5 percent from 2011-2013. This is 4.4 percent more than spending increases in GOP-controlled states. States embracing these lower-cost policies tend to enjoy earlier Cost of Government Days; states hoping to decrease the number of days their taxpayers must toil to pay for government should take note.

The national Cost of Government Day falls six days earlier than in 2013, reflecting the spending victories in Washington that have resulted in modest, but important, institutional changes to federal spending. Although Congress has worked to reform spending practices, the President has taken to using executive action to get around Congress, threatening to act on his own to implement his own policy agenda.  If this unilateral and unaccountable executive action continues, it will be much more difficult to forecast future Cost of Government days. What we can predict is that an expansion in the regulatory regime could sabotage the progress Congress has made in lowering federal government costs, leading to later Cost of Government days in the future.

TAGS: research, Spending, Regulation, Budget Reform

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