Economy Tanks, Thanks to Comrade Fedgov

Economy Tanks, Thanks to Comrade Fedgov

Phil Brennan
Wednesday, Aug. 15, 2001

In case you haven't noticed, we are now in the grip of a recession and sinking fast toward something worse, and you can blame it all on those wonderful people in Washington who just can't keep their hands off our wallets and their noses out of our business.

As Alan Caruba has pointed out in his current Warning Signs column on the National Anxiety Center Web site, noted economist Lawrence Kudlow says "the nation's gross domestic product for the April-June quarter revealed that the heart of the U.S. economy has slipped into a recession."

As has been widely reported, the so-called tech industry or wired economy - one of the sparkplugs of the recent economic boom - has been going down the tubes. As Kudlow notes, "the venture capital flow, the real money supply for the wired economy, has dropped more than 60 percent during the past year. Without a sufficient supply of risk capital and bank credit, entrepreneurship and innovation is left dead in the water."

It was exactly "entrepreneurship and innovation" that made this nation great, and it will be the absence of these factors that ultimately brings us down.

And that's just part of the gloomy news. Over the past year the media have been crammed full of stories about the fact that many of our industrial and business giants have been laying off tens of thousands of employees. Almost weekly there is a new story reporting this or that major company shedding employees in an effort to cut costs in a staggering economy Even the media - with ad revenue drying up - have been jettisoning employees by the carload.

According to Caruba, "Reuters reported on August 6th that US job cut announcements jumped an astounding 65% in July. The industries affected were telecommunications, computer, electronic, and industrial companies. Fully 205,975 found themselves out of work in July, more than three times the level of job cuts in the same month a year earlier."

This is always a classic prelude to economic catastrophe.

I don't plan to continue this sad litany of bad economic news. What I want to do is look at why we're in this fix, and I don't have to look very far to find the culprit behind this growing recession. His name is Uncle Sam, the kindly old gent who has somehow morphed into a Marxist tyrant bent on controlling every facet of American life and draining every dollar he can out of the pockets of the people who earned them.

Noting that the figures reveal that Comrade Fedgov outspends every other entity in the U.S., Caruba asked: "What kind of society is it when government is the largest spender? It’s a socialist one. Capitalism is about private enterprise and initiative. It is government at all levels that has created the conditions to destroy economic growth and you can point directly to the one third of all federal laws and regulations devoted to 'protecting the environment' as a major cause of the decline."

Let's take a look at the effect of government regulation which has been strangling the life out of our economy for years. In their monumental study Ten Thousand Commandments - An Annual Policy Maker's Snapshot of the Federal Regulatory State, by Clyde Wayne Crews Jr., the Cato Institute shows how "federal environmental, safety and health and economic regulations cost hundreds of billions every year - on top of official federal outlays."

How many billions? A stupendous, mind-boggling $788 billion in 2000, or 44 percent the size of all federal fiscal year 2000 outlays, according to Crews.

Moreover, there are hidden burdens we never see. Crews reports that:

Regulatory costs of $788 billion are equivalent to 7.9 percent of U.S. gross domestic product, estimated at $9,974 billion for 2000.

Regulatory costs rival the amount estimated to be paid in 2000 individual income taxes, which was $951.6 billion.

In 1998, the median two-earner family’s after-tax income of $41,846 contained $7,410 in hidden regulatory costs. Thus, regulatory costs eat up about 18 percent of the after-tax family budget.

Agencies spent $19 billion to administer and police the regulatory state in 2000, 6.7 percent more than the previous year. Counting the $788 billion in off-budget costs, that brings the total regulatory burden to $807 billion.

U.S. regulatory costs exceed the entire 1998 Gross National Product of Canada (the latest figure available), which stood at $581 billion. The regulatory burden was also more than double the 1998 GNP of Mexico, which totaled $368 billion.

Except for housing costs, embedded regulatory costs now exceed spending for every item in the average family’s after-tax budget. More is spent on regulation than on medical expenses, food, transportation, recreation, clothing and savings.

Who pays for all that federal meddling? You do. The cost of complying with all these meddlesome regulations is passed on to the consumer in the form of higher prices. Moreover, the money an employer has to spend to keep Uncle Sam's regulatory goons off his back is money that might otherwise have gone for increased salaries and benefits for his employees.

Sooner or later, all these regulatory straws mount up to a pile big enough to break the economic camel's back. And that's what's happening now.

But there's more. The effect this mountain of regulations has on ordinary citizens - farmers, lumbermen, ranchers - people in all walks of life - has been deadly, shutting off people's livelihoods, driving them off land they and their ancestors worked for generations, and in one horrendous incident, killing four firefighters denied the help they needed in the name of protecting a handful of so-called endangered fish (See http://www.pvbr.com/Issue_1/edit.htm).

Then there's the horrendous tax code, a towering Mount Everest of unintelligible instructions, regulations and just plain gobbledygook that causes even tax experts to throw up their hands in despair.

There's no reason for this code to exist except for the fact that by its very existence it promotes socialism and that's the ultimate goal of the Democrat Socialist Party, which stands ever in the way of any real tax reform.

Most conservative politicians admit that we'd be better off with a simple tax system - a flat tax or a national sales tax, for example - but thanks to the likes of comrades Daschle and Gephardt nobody can do anything about this Marxist tax system that is keeping the United States from enjoying an economic boom of massive proportions.

In the days when this republic was on its way to becoming the world power it is today, and Americans were busy building an economic miracle based on the precepts of free enterprise and individual liberty tempered by compassion and the duty that personal liberty demands of those who enjoy it, what I have written above would have caused a torrent of anger that would have flooded the streets of Washington and washed away the socialist elite who rule over us with arrogance and contempt.

Today, partly thanks to a socialist media bent on imposing a Marxist system on this nation by refusing to point the finger of blame for our failing economy and loss of individual liberty where it belongs - at Comrade Fedgov - there is a notable lack of anger on the part of Americans.

Mark this well. If we sink into a deep economic depression of the sort America endured in the 1930s the stage will be set for the introduction of a total Marxist system where the people will trade what liberty they have left for the bare sustenance socialism offers its captives.

In other words, we can blame Washington for what's happening to us, but we must also blame ourselves. Washington's power over our lives exists only because we allow it.

We'd better damn well get our danders up before it's too late.

Faugh 'a Ballagh!

For the complete Cato study go to http://www.cato.org

For Alan Caruba's column go to http://www.anxietycenter.com/

Phil Brennan is a veteran journalist who writes for NewsMax.com. He is editor and publisher of Wednesday on the Web (http://www.pvbr.com) and was Washington columnist for National Review magazine in the 1960s. He also served as a staff aide for the House Republican Policy Committee and helped handle the Washington public relations operation for the Alaska Statehood Committee, which won statehood for Alaska.

E-mail: pvb@pvbr.com

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