We've all heard the refrain: "There is no such thing as a free lunch".

Voters want government favors but not the taxes to pay for them. A lot has to be borrowed to pay government bills. Debt is rising for governments at all levels. Costs of expanding governments are immense and growing.

Tax Cost

Government Revenue in the United States has steadily increased from 7 percent of GDP in 1902 to over 35 percent today (see here). Still, government spends more than it takes in - a deficit. To find out more about deficits go here.

(from Facebook post)

To this list of direct taxes on you, realize the ones already paid by others who supply you with what you need to buy. Don't forget, businesses don't pay taxes. The customer pays for everything in the final price including all taxes paid by those who produce and distribute before the final sale to you.

Debt Service Cost

Debt is an accumulation of deficits. Debt is a cost because it must be repaid with interest. The federal debt has reached record levels. You can see the 'official' federal government debt here. It's not possible to borrow and spend the country out of debt. For more on national debt go here. To find out more about deficits go here. Increaingly the Federal Reserve Bank has to buy debt with printed money (monetizes debt) because not enough existing capital wants to buy US debt instruments. This leads to inflation. Inflation is a stealth tax that makes almost everyone poorer."You get the picture. It’s not pretty. The US debt rose by $1.6 trillion last year, almost $1 trillion more than the budget rose, because of “off balance sheet” debt obligations that somehow mysteriously show up as actual debt on the books but not in the official reporting budget. I would point out that if a public business were to publish its accounting statements in the same manner, the SEC would shut it down, and its management would go to jail." (click here for more) The cost of borrowing is called interest. Federal spending on interest payments is forecast to hit $870 billion this year — exceeding the $822 billion that the nation will spend on defense in 2024 (see here).

Essentially, the country is now in a 'debt trap' and must continually borrow more to pay back old debt AND even more to fund new spending plus interest.

Inflation = Tax

Creating money leads to inflation - defined as a general increase in prices and fall in the purchasing power of money. Inflation is an 'invisible tax' paid with higher prices of goods and services (see here). An informative inflation articles is here. Governments are the biggest debtors so they most benefit from inflation by paying back loans with 'cheaper' dollars. So creditors lose on such a deal. Governments benefit via inflation as well because taxes are determined by price, not purchasing power. A 10% sales tax on a $10 hammer is $1 but if the price doubles the tax nets $2. Similarly, if a $1 million asset were to double in price when sold the capital gains tax would double as well ... even though the asset is otherwise no more valuable. Similarly with other taxes (income, mortgage, etc). Nicely profitable for the government but not for we, the people. "The government is taking in inflation what it promises in entitlement spending. The result? You are poorer." ( click here for more)

Social Costs

Consumers make producers rich. Government consumes a lot. All government $pending is consumed & trickles up, down & sideways to producers of what is consumed. The more government $pend$ the richer producers get.  Building bridges to nowhere is a waste of money but it does enrich bridge builders. Supporting 10 million illegal aliens & 65 million safety net citizens doesn’t make those millions rich but it does enrich those who supply what these millions of people buy. (see here)

See: federalbudgetinpictures.com

This massive legislated money transfer (fiscal policy) leads to social divisions and political conflict by pitting different interest groups against each other while impoverishing 'middle class' taxpayers and widening the 'wealth gap' between the rich and poor.

Other Economic Costs

In addition to government debt the country faces other kinds of debt as well. Legislation alters supply/demand decisions for political gain but with economic costs (see rent seeking). It can affect any part of the economy. For a couple of examples see here and here. Student Loans are a major problem. Mortgages are again being taken out with little or no money down. Government policy encourages this to 'stimulate' the economy, we are told. But it just makes most of us debt slaves. Of course, the favored and politically connected make out pretty well. And in the rare instances when the privileged actually lose money those losses are socialized to the rest of us by decree.

Opportunity Cost

Could this money have been spent in ways that had better outcomes? A bridge to 'somewhere' instead of one to 'nowhere'?

"A government big enough to give you everything you want is strong enough to take away everything you have." - Thomas Jefferson

Click here for benefits.
Click here for Costs ; here for more Costs ; here for still more Costs.
Click here for examples of conflict and decline.
Click here for small government solution examples.

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