This article was linked today via Drudge Report.  The author, Terrence Jeffrey, writes the following:

“…the combined spending of federal, state and local governments per American household actually exceeded the median household income for 2010, which is the latest year for which all relevant government data are available.”

The total spending for all levels of government combined in the U.S. for 2010 was nearly $6 trillion.  This came out to just over $50,000 for each household.  In the same year, the median household income was reported at just under $50,000.

This is a point that I have tried to hammer home in the past.  Government spending is the major problem in the economy.  Taxes are a symptom of that problem.  The spending levels are absurd when you look at it in these terms.  Anyone calling for any tax hikes cannot be taken seriously.  Anyone who is not calling for significant spending cuts cannot be taken seriously.

Obviously the level of taxation is not spread evenly.  It is not like some single mother on welfare living in an inner city is paying $50,000 per year.  But many people don’t understand that there are many taxes that hit the poor.  The income tax makes up just a fraction of the total government spending.  There are significant sales taxes, property taxes, excise taxes, payroll taxes, and many others that we don’t even think about.  There is also the hidden tax of inflation, which erodes the purchasing power of the dollar.  Even corporate taxes and employment taxes on employers hit the poor, even if indirectly.

On the other side, we know that rich people and high income earners (not always the same people) pay huge amounts in taxes.  You can be sure that the tax burden for rich people is far higher than the average $50,000 per household.  So this class warfare game that is played is a bunch of garbage.  It is an excuse to justify ever-more government spending.

And of course we know that the middle class is constantly taking it on the chin.

This is why our economy is struggling so much.  It is why unemployment is high.  It is why people are having trouble paying their bills, even for basic necessities.  It is why people have trouble finding jobs and are having to put up with harder working conditions.  It is why the mood of the country is generally down.

Government spending has to go down significantly.  Virtually all government spending is a misallocation of resources.  It discourages saving.  It makes us all poorer in the long run.

I believe there will be a reduction in spending eventually, particularly at the federal level.  It is just a question of how it will come about.  It looks like it will be done the hard way.  Congress will be forced to cut spending when the Fed refuses to buy more government debt.  The Fed will have to do this one day to save the dollar.