Government Spending
Growth of Government
Since 1960, adjusted for inflation, state government spending has increased by 376% and state government debt has grown by 519%. While increased population accounts for some of the increase in spending, it cannot fully explain the explosive growth in the size of Michigan government.
Local governments have also increased spending at an unsustainable rate. Between 1980 and 2005, local government spending, adjusted for inflation, increased an astonishing 57% while local debt increased 71%. The population is shrinking and the economy is receding while the government is rapidly expanding.
What’s more astounding than the increased spending is the debt that is also being accumulated by Michigan governments. In 1980 state debt was only $7.1 billion (in inflation-adjusted 2007 dollars) but by 2008 it had increased to over $32 billion, a 358% increase. Local government borrowing is even greater than state debt as local governments owed $20 billion (in inflation-adjusted 2007 dollars) in 1980 and an incredible $41 billion in 2008. Michigan state and local governments owe a combined $73 billion – almost $7,300 per Michiganian. Debt of that magnitude has its costs; local governments in Michigan spent more on interest payments in 2006 than on fire protection.
The State of Michigan is spending money that it doesn’t have at a greater and greater pace. Notice that with a flat population and contracting economy, the government has produced a very large increase in spending and debt. As this trend of increased spending continues and the economy struggles, the burden of these government expenditures falls on the hard-working Michigan residents who are trying to turn the state around. Expansive government spending and borrowing perpetuates the cycle of recession and unduly burdens the economy. To break this vicious cycle, Lansing needs to rein in its spending and adopt a policy of fiscal restraint and responsibility.
High spending drives up taxes and harms the economy. Consider the following:
• Taxes and regulations from federal, state, and local governments eat up more than half of an average family’s income.
• When government attempts to create jobs by spending tax dollars, it is simply destroying jobs the free market would otherwise create and misallocating resources.
• Every local government bond approved is in fact a delayed tax increase.
• Government cannot create prosperity. Every dollar spent by government, every new government employee, and every bond issued by government equates to a job lost or paycheck cut in the private sector.
• Governments exist to protect rights and individuals’ opportunity for economic opportunity; thus promoting wealth creation.
The True Costs of Government
The calendar below shows the number of days Michiganders work to pay their share of the costs of government. It includes both the visible costs of government spending at all levels and the hidden costs of state, local and federal regulation.
Michigan taxpayers have to work more than half the year to pay for government. We directly control less than half of the money we earn.
AFP-MI also:
•Supports eliminating so-called “Prevailing Wage” laws.
•Opposes any expansion of Binding Arbitration and supports abolishing the current law.
