Big Government Is The Biggest Business Of All

The House and Senate are still wrangling over details, but rough numbers are already in place: The US government’s budget for fiscal year 2010 will land north of $3.5 trillion.

That’s big business. How big? Big.

The federal government employs 2.7 million civilian workers at an average wage of more than $63,000 per year. That’s not counting more than 1.4 million active duty military personnel and more than half a million reservists and National Guard members.

Nor does it include the many state and local government employees whose salaries are routed through Washington in one way or another. Altogether, government at every level directly employs about 20 million Americans — and millions more work for businesses which rely on government contracts for much of their revenue.

The “customer” — you — ultimately picks up the tab, of course. For fiscal year 2010, your bill from the federal government comes to nearly $18,000.

Yes, you read that right. $3.5 trillion divided by 300 million is $17,666, give or take. And that’s just your federal government bill. You’ll also shell out to state, county and local governments.

What’s that you say? You aren’t paying that much? Maybe you’re right. Federal income taxes are “progressive” — the wealthier pay more — and you may be below average on that scale.

Also, about a third of the federal budget is borrowed, so you don’t see that as an up-front demand for cash. Some of your taxes go for interest on the US government’s accumulated debt ($11 trillion or so at this time), but much of that debt awaits your grandchildren’s attention. Think of it as the gift that keeps on taking.

Still, the tab comes to 18 large per person, and someone’s paying it. You’re paying it in ways you probably don’t even notice.

When you buy a widget at the local hardware store, some portion of the price ends up in Washington. That hardware store owners builds his taxes into the price. So does the manufacturer of the widget. So does the company which delivers the widget to from the factory to the store.

Those Social Security deductions from your weekly paycheck (which, by the way, are not part of the aforementioned tab)? There is no “lockbox.” As soon as Uncle Sugar gets his grubby fingers on that money, he spends it and replaces it with IOUs. Literally. By law, every dime the Social Security Administration collects and which isn’t used to pay out current benefits must be loaned to the US Treasury.

Of course, sooner or later (and right now it looks like sooner), Social Security will owe more in current benefits than it’s taking in in current revenues. At that point, it starts cashing in those IOUs … which means you get to pay them back (in taxes) the money that you gave them (in taxes) and that that they loaned to the Treasury and that Congress spent on figuring out new and better ways to tax you more.

Don’t despair, though. It turns out that all that money is just paper anyway. The only values it possesses are compulsion (“legal tender” laws requiring everyone to accept it “for all debts public and private) and superstition (it’s backed by “the full faith and credit of the United States” — i.e. your confidence in the federal government).

The convenient fiction that fiat paper currency is “money” really only means that you get taxed some more — through inflation.

Have you ever wondered how this “money” is created? Here’s how it works: When the government wants more money in circulation, the Federal Reserve buys … you guessed it … more government debt! The Fed prints up a billion fresh new dollar bills and buys “government securities” with them. At that point, every dollar bill in your wallet becomes worth just a little less than it was worth before — and you “owe” a little more than you did before to boot. Is it just me, or is “government securities” sounding more and more like an oxymoron?

Of all the “big businesses” you deal with, the federal government is the biggest. Unless you have an exceptionally large mortgage payment, your taxes (open and hidden, direct and indirect, immediate and deferred) are probably your single greatest annual personal expense.

You are the “customer.” Are you getting your money’s worth? Would you do business with these people at all if you had a choice? Are they offering you something you can’t live without … or just making you an offer you can’t refuse?

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