Are We Becoming European?
Following the fiscal cliff melodrama, Senator Richard Shelby appeared on television to declare that we are becoming European. “We're always wanting to spend and promise and spend and borrow but not cut. We've got to get real about this. We're headed down the road that Europe's already on.”
There's no “heading” about it. We're there. Prof. John J. DiIulio, writing in “National Affairs”, outlined the true size of American government. When state and local government expenditures are added to federal outlays, government spending as a share of GDP easily competes with European nations. In fact, per-capita government spending in the U.S. is higher than in France, Germany and the United Kingdom, and our debt to GDP ratio is higher than most European states.
The Obama administration has set records for deficit spending in peacetime, but there is no question that the growth of government at all levels has been a decades-long process. In 1960, total government spending (local, state and federal) amounted to 27 percent of GDP. In 2010, it was about 42 percent. State spending has been almost as irrepressible as federal, leaving only nine states that can now boast AAA credit ratings. Many states are facing crises over unfunded pension liabilities that have the capacity to engender strikes and social unrest in the not too distant future.
Though President Obama and the Democrats are fond of citing the “two wars on a credit card” and the Bush tax cuts as drivers of our debt, the truth is that the first Obama term added $4.5 trillion to the national debt in just three years – more than the total debt amassed by the United States government in two centuries. DiIulio writes: “Add our annual debt per capita (about $49,000 in 2011) to total annual government spending per capita (about $20,000 in 2011), and we have a rough 'big government index' of nearly $70,000 for every man, woman, and child in this country.”
The difference between Americans and Europeans is that we aren't honest about our appetite for big government. We hide it through a variety of proxies, private contractors, and public/private partnerships. Leaving aside the Department of Defense, which employs 3.2 million Americans, government employs more than 20 million civil servants. Only 2 million of those are full-time federal workers. The Department of Homeland Security, for example, employs 188,000 federal bureaucrats, but also 200,000 privately contracted employees. Medicaid doesn't employ an army of civil servants but instead pays private employees of medical practices, hospitals, and nursing homes.
The EPA employs between 16,000 and 18,000 full time personnel. It has been able to expand its regulatory reach though by cooperating with 50 state EPA equivalents and by hiring tens of thousands of private contractors.
Most non-profits receive few government subsidies. But the largest ones with the biggest budgets are heavily government-dependent. One-third of all non-profit dollars come from government. Catholic Charities USA, for example, a marquee “private-sector” charity, received two-thirds of its funding in 2009 from Uncle Sam.
Americans prefer small government to big government – in the abstract. But 60 million receive Medicaid benefits, 54 million collect Social Security, 48 million participate with Medicare, 45 million receive Food Stamps, 7 million are in prison, jail, or on parole/probation, more than a million have de facto government jobs working for defense contractors, nearly a million children participate in Head Start and about 40 percent of K-12 students receive free or reduced price meals. There's some overlap in those categories, but it still adds up.
Taking a government check goes down much more easily when you can persuade yourself that you're only withdrawing money that you have faithfully paid in over the course of a lifetime. Indignant elderly callers to C-SPAN constantly invoke the “I paid for my Social Security” myth.
They didn't. The average beneficiary will receive far more in Medicare and Social Security benefits than he paid for in taxes.
We are, in short, a socialist-style society just like Europe. And Obamacare has yet to kick in.
The road to recovery begins with admitting you have a problem.
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