Happy Dependence Day

On the fourth of July, we celebrate our freedom from tyranny. Yet King George would be envious of the control the U.S. government, and state and local governments hold over American citizens today.

Our freedom is eroding and, unless major changes are made, someday it will be gone.  If America is the “land of the free,” why are college campuses and media increasingly accepting only “progressive” viewpoints?  Diversity is a great thing, but it should go beyond race and gender to include differing points of view.SR-fed-spending-numbers-2012-p8-1-chart-8_HIGHRES

President Obama has said that he is not a king, but he has acted like one, signing a seemingly endless stream of executive orders. New laws are no longer passed by Congress, but are created by executive order (environmental regulations, dropping restrictions on Cuba) or by one-party vote (the Affordable Care Act, Dodd-Frank Wall Street Reform and Consumer Protection Act).

And, increasingly, Americans are trading their independence for government dependence.

Consider some of the ways in which we are losing our freedom.

Growing entitlement programs.  Columnist Terry Jeffrey caused a bit of a stir when he pointed out in 2015 that the number of Americans receiving entitlement benefits from government programs exceeds the number of people in the workforce.

“In 2013, according to the Census Bureau, there were 105,862,000 full-time year-round workers in the United States—including 16,685,000 full-time government workers,” Jeffrey wrote. “These full-time workers were outnumbered by the 109,631,000 whom the Census Bureau says were getting benefits from means-tested federal programs—e.g. welfare—as of the fourth quarter of 2012.”

While his column is open to interpretation, his conclusion is true that, “Every American family that pays its own way—and takes care of its own children whether with one or two incomes—must subsidize the 109,631,000 on welfare.”

The percentage of Americans receiving financial support through a federally-funded “means-tested program” is 35.4%, but when you add pensions, unemployment, Social Security and Medicare, the percentage of Americans who rely on the government for part or all of their subsistence is 49.5%.  In other words, half of the country is paying to support the other half.

As the chart shows, unless major changes are made, it’s about to get much, much worse.

Shrinking economic freedom.  As we’ve previously pointed out, the 2016 Index of Economic Freedom gives the U.S. a rating of 75.4 points out of 100, pushing the U.S. out of the top 10.

It was the eighth time in the past 10 years that the U.S. has lost ground.  In contrast, more than half of the countries in the index—97 out of 186—improved their score this year and 32 recorded their highest level of economic freedom ever.  Ratings are based on factors such as the size of government, regulations, degree of corruption, taxes and the openness of markets.

Given that both presidential candidates have spoken out against free trade, the U.S. rating is likely to drop even further in years to come.

Increasing regulation.  In 2015, the Federal Register contained a record 81,611 pages of new regulations.  That record exceeds that of years in which the Affordable Care Act (10,000 to 20,000 pages of regulations) and The Dodd-Frank Wall Street Reform and Consumer Protection Act (15,000 pages of regulations and “just getting started”) became law.

In addition, according to Politico, “Nearly 4,000 regulations are squirming their way through the federal bureaucracy in the last year of Barack Obama’s presidency—many costing industry more than $100 million—in a mad dash by the White House to push through government actions affecting everything from furnaces to gun sales to Guantánamo.”

Fewer small businesses.  Increased regulation is slowing economic growth and muting the ultimate freedom of owning a business.  In the 1980s, businesses with fewer than 100 employees generated 58% of net new jobs, according to the Census Bureau.  Today only 31% of net job growth comes from small businesses.

The Small Business Administration today provides loans to about 45,730 small businesses—half as many as used to receive assistance.  One reason is that the rules governing the loans are 528 pages long.

Higher taxes.  As we’ve previously noted, the U.S. has the highest corporate tax rate (39%) of any developed country. And that doesn’t include state taxes.

The U.S. is also virtually the only country that taxes corporate income when it is returned to the U.S.  The result is that businesses with overseas operations are taxed twice—first in the country where the income is earned and again when the money returns to the United States.

In years to come, unless entitlement spending is addressed, taxes will have to increase significantly not only to pay for entitlement spending, but to service the rapidly increasing government debt.

The Land of the Free

Independence means freedom from government control.  Laws are, of course, necessary to maintain order and to prevent other parties from interfering with our freedom.  But we don’t need 81,611 pages of new regulations a year.

Our next president and members of Congress need to unite and work together to address entitlement spending, reform taxes and deregulate. They will have to pass legislation that is likely to be unpopular if they want to preserve our freedom.

Doing so will require courage and persistence, but we can’t be the land of the free without being the home of the brave.

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