America Just As Socialist As Europe

David Brooks points out that, despite the mythology of America as a land of rugged individuals and Europe as a socialist experiment gone wrong, the amount of social welfare spending is roughly the same.

David Brooks points out that, despite the mythology of America as a land of rugged individuals and Europe as a socialist experiment gone wrong, the amount of social welfare spending is roughly the same.

The U.S. does not have a significantly smaller welfare state than the European nations. We’re just better at hiding it. The Europeans provide welfare provisions through direct government payments. We do it through the back door via tax breaks.

For example, in Europe, governments offer health care directly. In the U.S., we give employers a gigantic tax exemption to do the same thing. European governments offer public childcare. In the U.S., we have child tax credits. In Europe, governments subsidize favored industries. We do the same thing by providing special tax deductions and exemptions for everybody from ethanol producers to Nascar track owners.

These tax expenditures are hidden but huge. Budget experts Donald Marron and Eric Toder added up all the spending-like tax preferences and found that, in 2007, they amounted to $600 billion. If you had included those preferences as government spending, then the federal government would have actually been one-fifth larger than it appeared.

The Organization for Economic Cooperation and Development recently calculated how much each affluent country spends on social programs. When you include both direct spending and tax expenditures, the U.S. has one of the biggest welfare states in the world. We rank behind Sweden and ahead of Italy, Austria, the Netherlands, Denmark, Finland and Canada. Social spending in the U.S. is far above the organization’s average.

You might say that a tax break isn’t the same as a spending program. You would be wrong.

David Bradford, a Princeton economist, has the best illustration of how the system works. Suppose the Pentagon wanted to buy a new fighter plane. But instead of writing a $10 billion check to the manufacturer, the government just issued a $10 billion “weapons supply tax credit.” The plane would still get made. The company would get its money through the tax credit. And politicians would get to brag that they had cut taxes and reduced the size of government!

This is essentially what’s been happening in sphere after sphere. Government controls more and more of the economy. It just does it by getting people to do what it wants by manipulating the tax code. Politicians get to take credit for addressing problem after problem, but none of their efforts show up as unpopular spending.

Many of these individual tax expenditures are good for the country, like the charitable deduction and the earned income tax credit. But, as the economist Bruce Bartlett demonstrates in his impeccably fair-minded book, “The Benefit and the Burden,” the cumulative effect of these tax breaks is terrible. Like overgrown weeds, the tangle of tax breaks distorts behavior, clogs the economy and deprives the government of revenue.

And because they are hidden, many of the tax expenditures go to those who need them least, the well connected and established over the vulnerable and the entrepreneurial.

Additionally, in disguising welfare as tax policy, we have a much less efficient welfare state. We’d doubtless be far better off with the dreaded European Socialized Medicine than our current patchwork of taxpayer subsidized insurance plans. Not only do we get much less bang for the buck than our European, Canadian, and Australian counterparts but there are gaps in our coverage for those temporarily unemployed, moving in between jobs, and so forth.

FILED UNDER: Quick Takes, US Politics
James Joyner
About James Joyner
James Joyner is Professor and Department Head of Security Studies at Marine Corps University's Command and Staff College and a nonresident senior fellow at the Scowcroft Center for Strategy and Security at the Atlantic Council. He's a former Army officer and Desert Storm vet. Views expressed here are his own. Follow James on Twitter @DrJJoyner.

Comments

  1. Brummagem Joe says:

    But we prefer our myths don’t we JJ? Just like that story in the NYT about all those rugged individualist Republicans in the midwest who in fact are totally dependant on federal programs but want to cut them. Even excluding the various social safety net provisions of the tax code total federal and state budgets are over $5 trillion so the entire shrinking the size of govt, drown it in a bathtub storyline is a total fantasy. Just look at the current highway bill fix where Republicans are tying themselves in knots in pursuit of ideology instead of facing up to realities and attempting to legislate sensibly.

  2. superdestroyer says:

    The best way to tell that the U.S. leans socialist is to see how Americans support the current level of $3.8 trillion dollars in federal spending and $3 trillion dollars in state and local spending. http://www.usgovernmentspending.com/statelocal_spending_2012USrn

    Americans will not tolerate any politicians who proposes spending cuts and in reality most Americans support even higher levels of spending that currently occur. The only problem that Americans have is in actually paying for all of the desired spending.

  3. Gustopher says:

    Huh. I didn’t realize Mr. Joyner was in favor of a government takeover of health insurance. Way to the left of Obama on this.

  4. Ben Wolf says:

    @superdestroyer: Spending as a socialist-ometer. Wow, anything you want can be socialism these days!

  5. An Interested Party says:

    But we prefer our myths don’t we JJ?

    Well this is the problem in a nutshell…and it can be laid largely at the feet of the GOP, conservatives, and libertarians…despite whatever the Eric Floraks of the world tell us, most Americans do want a lot of governement services, whether they are paid for or not…the sooner that those who decry the welfare state come to the realization that a majority want a welfare state, the sooner that both sides of the political spectrum can come together and work out a reasonable way to make it work and to pay for it…

  6. michael reynolds says:

    Not only do people want a safety net and government regulations, they are quite simply necessary to social stability and to the business environment. Which is why I laugh at libertarians. Their views aren’t just mistaken, they’re anachronistic. Absurd. Irrelevant.

    The real issue is how to manage the safety net and government regulation and other government services. We get distracted by nonsensical accusations of fascism or communism or slavery (!) when we should be coming to grips with practical matters that have less to do with percentage and more to do with making things work.

    The reason that European countries often have superior infrastructure, education, and access to medical care is that they elect technocrats trained in making the government work rather than turning the government over on a regular basis to paranoid ideologues from hick towns and Potemkin states.

  7. Jay says:

    Although tax breaks are similar to handouts if you’re an economist, I think the American public see a huge difference between “the government sends me a check” and “the government charges x company fewer $$ in taxes”.

    On a side note, the section of the op-ed that you quoted seems entirely too cogent for Brooks. I’m wondering if he has a ghost writer now.

  8. superdestroyer says:

    @An Interested Party:

    My guess is that if people really had to pay full fare for their government they would want much less of it. Currently people get government at a $1.3 discount due to deficit spending.

    If everyone had their incomes taxes doubled in order to pay for the “safety net” they would demand much less of a safety net than we have now and would be much less tolerate of people’s having to be saved from their own stupid decisions.

  9. An Interested Party says:

    @superdestroyer: You proceed from numerous false assumptions, especially the idea that the safety net is particularly for people who need to be “saved from their own stupid decisions”…unless, of course, you are referring to the big bank bailouts…now there was a case where a lot of stupid decisions led to a very large “safety net” being deployed…

  10. Just nutha' ig'rant cracker says:

    @An Interested Party: You’re not seeing the point: we want to have a welfare state, not pay to have one. And each faction in the nation holds that the others aren’t paying their fair share, too.

    In essence, I want you to pay for safety net upkeep. I would do it, you understand, but my taxes are already too high (and you’re just a taker anyway;-( ).

  11. superdestroyer says:

    @An Interested Party:

    If a tornado hits your home, it is not your fault. If you parents abused you, not your fault.

    However, If you have problems because you had a child at 15 y/o, married an abusive boyfriend, used drugs, dropped out of school, or drink too much, it is your fault.

    The reason progressives love the “safety net” is that is backs stops all of their decisions. IN addition, what people do not really like are freeloaders who have a sob story and too many people fall for. There is nothing that irritates people more than being taken by a grifter.
    When the safety net is big, it just teaches a lot of people how to be grifters.

  12. Graham says:

    @michael reynolds: HA! Liberty is anachronistic, eh?

    While I disagree with you, I actually find your straight talk refreshing.

  13. Graham says:

    @michael reynolds: Upon further consideration, I have to concede that you’re right. Liberty is an anachronism.

    I’m still a fan though.

  14. anjin-san says:

    The only problem that Americans Republicans have is in actually paying for all of the desired spending.

    FTFY

  15. anjin-san says:

    they are quite simply necessary to social stability and to the business environment.

    Bingo. Take the safety net apart and watch the fun when the have nots have nothing to lose and start killing the haves. Well, there is a silver lining to that – we will need a police state to maintain order. The cops are already armed for it and have the cameras in place.

  16. An Interested Party says:

    You’re not seeing the point: we want to have a welfare state, not pay to have one.

    That was funny, but I do see your point as I’m well aware of the hypocrisy of many Americans when it comes to this issue…

    IN addition, what people do not really like are freeloaders who have a sob story and too many people fall for. There is nothing that irritates people more than being taken by a grifter.

    Once again, I’m reminded of the bank bailouts, “too big to fail”, etc….but you continue to live with your delusion that teen moms are sucking up all your tax dollars, in your case, especially black and brown teen moms…

  17. anjin-san says:

    used drugs, dropped out of school, or drink too much, it is your fault.

    Actually, for the people with the most egregious substance abuse issues, it is not their fault. Roughly 8% of the population consists of natural born addicts. They can get hooked on a stiff breeze. Most of them start very young, but that does not keep conservatives from making pious speeches about “bad decisions.”

    Should we flush someone down the toilet because they made some bad decisions when they were 13 (an age where the brain is still developing and things like abstract reasoning and rational decision making are not fully on line)?

    In tea party America, the answer is hell yes.

  18. michael reynolds says:

    @Graham:
    A perfect example of the immature libertarian mind. All or nothing, either/or, simple simple simple. A teenaged mindset.

  19. superdestroyer says:

    @anjin-san:

    Most Democrats want a large, big spending government paid for by others. Why do you think the push for very progressives taxes, the push to means test social security, and the push to have the rich “pay their fair share”

    Democrats are no more interested in paying for the government they want than Republicans

    In the long run, as the U.S. becomes a one party state, the safety net will probably expand to the point that it will push out most everything else in the U.S.

  20. superdestroyer says:

    @michael reynolds:

    And I guess the Democrats have the rational, fact-based group when they propose open borders, unlimited legal immigration, along with single payer health care, government jobs for everyone along with no manufacturing, no energy production, and a very small private sector.

  21. superdestroyer says:

    @anjin-san:

    She the government fund someone for their entire life because they keep making repeated bad decisions.

    I guess as long as all problems are “medicalized” then it becomes the duty of responsbile, future time oriented individuals to subsidize the standard of living of those who are short sighted and irresponsible.

  22. Brummagem Joe says:

    The fact is Americans want the safety net of social programs which is why they are called the electric rail of American politics. They also want a huge military, roads without potholes, drugs that don’t poison them, aeroplanes that don’t crash into each other, clean water and air, lettuce not infected with typhoid, cars whose gas tanks don’t explode, and a host of other modern conveniences. Republicans want to pretend that these can be obtained at no cost but as usual they are out of touch with reality and their contortions as JJ and Brooks are pointing out inevitably end up costing our society more than they need to do. The most egregious case being healthcare where in round terms we’re paying twice as much for it as anyone else and not getting such a good deal. For some bizarre reason Republicans and those they have brainwashed believe this is a good idea but then reality is just not their thing. They prefer their myths however irrational.

  23. Brummagem Joe says:

    Herein is a rather typical example of Repubican irrationality that entirely proves my point.

    superdestroyer says:
    Sunday, February 26, 2012 at 06:33

    And I guess the Democrats have the rational, fact-based group when they propose open borders, unlimited legal immigration, along with single payer health care, government jobs for everyone along with no manufacturing, no energy production, and a very small private sector.

  24. superdestroyer says:

    @Brummagem Joe:

    Are the Democrats not proposing “rational” immigration reform of amnesty for everyone here now, massive increases in the number of legal immigrants, and still promising more amensties in the future since everyone who receive an amensty will stop working in the field they work now but will just move over to take advantage of the public “safety net.”

    Aren’t the Democrats pushing for single payer and that is why they have designed ACA to fail?

    Look up how many progressives are pushing for guaranteed income for Americans.

    Once again, how does the country unlimited immigration from third world contries along with a massive “safety net: for everyone here.

    The ultimate question is what is the maximum percentage of the GDP that the government can consume before everything collapses.

  25. Brummagem Joe says:

    @superdestroyer:

    Q.E.D.

  26. superdestroyer says:

    @Brummagem Joe:

    I take it that Q.E. D. is your way of being snarky without offering any form of response.

    California has massive government spending problems because it tried to have open borders with Mexico (more people born in Mexico live in Los Angeles than any city in Mexico except Mexico City) while also trying to maintain a high level of spending on “safety nets.”

    Now California has run out of money and the middle class is shrinking and whites are moving out of the state.

    That is what the U.S. has to look forward to no matter how hard progressives try to argue that the U.S. can be just like Finland.

  27. michael reynolds says:

    @superdestroyer:
    You’re a waste of pixels, but of course the Democrats have proposed none of that. As usual you argue with a figment.

  28. superdestroyer says:

    @michael reynolds:

    OK, what have the Democrats proposed that would limit the number of immigrants into the U.S.?

    Even though the Obama Administration has not directly proposed single payer because the administration did not want to be responsible for 100,000’s of insurance workers to lose their jobs, most factions of the Democratic Party to include public sector unions, private sector unions, academics, and minorities have all pushed for single payer.

    I know that you read the progressive websites and those sites have almost daily posting wanting to nationalize some aspect of the economy.

    IF what a single Republican says applies to all Republicans, then why doesn’t that big labor and elite progressives propose apply to all Democrats?

  29. Brummagem Joe says:

    @superdestroyer:

    I take it that Q.E. D. is your way of being snarky without offering any form of response.

    No response is necessary…your own words provide far more eloquent proof than I ever could of the extent of your own realism and truthfulness.

  30. Brummagem Joe says:

    @superdestroyer:

    I know that you read the progressive websites and those sites have almost daily posting wanting to nationalize some aspect of the economy.

    Q.E.D.

  31. superdestroyer says:

    @Brummagem Joe:

    MR himself has advocated single payer health care while posting at OUtsidethbeltway. Then he claims that Democrats are not pushing for single payer.

    The Democrats would have pushed through single payer is they thought they could get away with it. But eliminating so many jobs in the middle of a recession was considered a bad idea.

    NOw the U.S. faces the prospects that the federal government will decide what treatments will be made available, who will offer them, and what a provider will receive for the service.

    And then the same progressives claim that there is socialism is not involved.

    Ask yourself why anyone would want to invest in an insurance company, a drug company, a healthcare providers, or a manufacturer of medical equipment or supplies with the coming indirect government control.

    My guess is that snark will be your only answer.

  32. Haywood says:

    @michael reynolds: Far too many people have a “hammock” instead of a safety net. Entitlements? Just who is entitled to anything ? Veterans? Okay, but they earned anything that this country can give them.

  33. Donald Sensing says:

    As I wrote in 2010:

    We voters ideologically approve cutting the budget but operationally don’t want it done on our own backs. My parents are in their 80s. Do I really want Medicare to be cut? Baby boomers, of whom I am one, are just starting to retire in large numbers. Guess what’s going to happen to Social Security spending? Do we really want those payouts slashed just as we’re starting to draw them?

    Including government employees, more than 88 million Americans are personally dependent to some degree on government payouts. That’s 29 percent of us. Do you really think it is politically possible for even a veto-proof Republican Congress to slash those programs, jobs or benefits enough to make a meaningful dent in the trillion-dollar-plus deficit?

    … The question is whether we have the will – the will, each one of us, to accept the consequences personally.

    And I think, across the board, the answer is no.

  34. Coffee Lover says:

    I’m looking for the OECD report that the article references any ideas?