Lying to Ourselves: America's Welfare State
If you fear America is becoming like Europe, fear not – because it’s too late.
In Hamlet, Polonius, the Chamberlain to the King, gives his son what is probably the most famous piece of fatherly counsel in all of literature: “This above all: to thine own self be true.”
Polonius’s exhortation is one that Americans should take to heart – and his famous words came to mind while reading a recent New York Times article. The article was about the residents of Chisago County, Minnesota, who, according to the Times, “describe themselves as self-sufficient members of the American middle class and as opponents of government largess.”
At the same time, they “are drawing more deeply on that government with each passing year.” In 2009, the last year for which data is available, the residents of the county received an average of $6,583 in federal benefits – a 69 percent increase since 2000.
While most of the benefits go to older residents, assistance to younger residents is growing at about the same rate.
To be fair, Chisago County is far from unique – on the contrary, it’s typical. What comes to mind for most Americans when they think of the beneficiaries of “government largess” is an African-American single mother. But a more complete representation requires looking in the mirror.
If this comes as a surprise to you, it’s because the architects of the American welfare state have worked hard to hide that fact.
As David Brooks recently wrote in the New York Times, “the U.S. does not have a significantly smaller welfare state than the European nations. We’re just better at hiding it.” Whereas European countries “provide welfare provisions through direct government payments,” the U.S. does it “through the back door via tax breaks.”
For instance, “European governments offer public childcare. In the U.S., we have child tax credits.” European governments openly “subsidize favored industries.” We provide “special tax deductions and exemptions” for Washington’s favored industries.
This back-door approach allows Americans to indulge in the fantasy of their self-reliance and rugged individualism without actually being self-reliant or rugged.
The back-door approach is also grossly inefficient: Many of the benefits flow to “those who need them least." It’s a system that rewards those with the best lobbyists instead of protecting those who truly need help or who would put taxpayer’s money to the best use.
Even worse, it’s unsustainable. The same day Brooks’ column appeared in the Times, European Central Bank President Mario Draghi told the Wall Street Journal that the European "social model” was “already gone.” In other words, it’s a thing of the past – it’s failed – Europe can no longer afford it.
Neither can we. When you include both direct and back-door social spending, our welfare state is bigger than Italy’s. It is “far above average” when compared to other industrialized nations. Unless we intend to leave our children and grandchildren with an unconscionable debt burden, that must change.
That change, as Polonius would tell us, begins with being true to ourselves. Americans say that they are concerned about the deficit, which they propose to close by cutting someone else’s benefits.
Well, we are all “someone else.” Nothing will change until we and our leaders admit this fact.