European Government at American Tax Rates

Americans are drifting through the most lackluster economic expansion in the post-World War II period, increasingly dependent on European-sized social welfare programs but clinging to the illusion that traditional American-style growth is right around the corner.  

In his weekly column, Mark Steyn describes the phenomenon, pointing out the real cliff facing the United States of America.  Mull on this comparison:

According to the most recent (2009) OECD statistics: Government expenditures per person in France, $18,866.00; in the United States, $19,266.00. That’s adjusted for purchasing-power parity, and, yes, no comparison is perfect, but did you ever think the difference between America and the cheese-eating surrender monkeys would come down to quibbling over the fine print? In that sense, the federal debt might be better understood as an American Self-Delusion Index, measuring the ever-widening gap between the national mythology (a republic of limited government and self-reliant citizens) and the reality (a 21st century cradle-to-grave nanny state in which, as the Democrats’ Convention boasted, “government is the only thing we do together.”).

Generally speaking, functioning societies make good-faith efforts to raise what they spend, subject to fluctuations in economic fortune: Government spending in Australia is 33.1 percent of GDP, and tax revenues are 27.1 percent. Likewise, government spending in Norway is 46.4 percent, and revenues are 41 percent – a shortfall but in the ballpark. Government spending in the United States is 42.2 percent, but revenues are 24 percent – the widest spending/taxing gulf in any major economy.

So all the agonizing over our annual trillion-plus deficits overlooks the obvious solution: Given that we’re spending like Norwegians, why don’t we just pay Norwegian tax rates?

  1. Aaron Miller

    The only difference between Europe and America these days is that American socialists can’t call themselves socialists.

  2. drlorentz

    The link is broken. I think you meant to link to this piece.

    Mark Steyn is hilarious, as usual. Too bad the underlying message is so tragic. Cheese-eating surrender monkeys indeed!

  3. George Savage
    drlorentz: The link is broken. I think you meant to link to this piece.

    Mark Steyn is hilarious, as usual. Too bad the underlying message is so tragic. Cheese-eating surrender monkeys indeed! · 6 minutes ago

    Link fixed.   Many thanks!

  4. Western Chauvinist
    Aaron Miller: The only difference between Europe and America these days is that American socialists can’t call themselves socialists. · 31 minutes ago

    The only difference between Europe and America these days is that American socialists deny that they’re socialists.

    FIFY

    It has the advantage of being true and using the “denier” terminology.

  5. Mendel

    I’m glad to see Steyn making this point.  It drove me nuts when I lived in Europe to hear American conservatives yelling about “not becoming Europe,” and then realizing that America was in many ways out-Europing the continent itself.

    Sometimes I think America needs to [expletive] or get off the pot.  We have an equivalent spending:GDP ratio of many European welfare states, but our welfare programs are run much worse than most of those in Europe (just look at healthcare with Medicare/Medicaid/SCHIP etc).

    Either let’s start cutting these entitlements, or if we can’t, let’s admit that we are a social democracy and reform our institutions accordingly.  Trying to split the baby is killing us.

  6. Fake John Galt

    Where do I go to get my $19,266.00 at? You see that is the problem. They may be spending the money and assigning the expense to my name but that does not mean it is being spent on me or to even help me.

  7. KC Mulville

    Krugman and the Democrats argue that we don’t have to worry about debt, at least not seriously, because the world still sees America as a good investment.

    That. Can. Change.

    If (when) it does, laughing off that gargantuan debt will be historic negligence.

  8. Robert Dammers

    I had an exchange with Iain Murray about this – he agreed (and he’s written a book about it, of course) that one of the issues is that America already has European levels of expenditure on entitlements and health, but has even more lousy public sector productivity (up until the turn of the century it could at least be argued that the NHS was good value for money) than most of Northern Europe. And that, of course, is the biggest threat with Obama (just like Gordon Brown) – that he will supercharge the gas guzzler, and then be surprised that he can’t keep it fueled with taxes only on the rich.Even at current levels of expenditure, the President is right that the system is unbalanced. Where he is wrong is that widespread welfare provision (as opposed to a safety net) requires all to contribute – the balance needed is that the everyone’s taxes will have to go up (since there is only so much Chinese money to borrow).

  9. BlueAnt
    Fake John Galt: Where do I go to get my $19,266.00 at? You see that is the problem. They may be spending the money and assigning the expense to my name but that does not mean it is being spent on me or to even help me.

    Amen.  And give me that $19k in cash, I don’t want it portioned out into food stamps, “free” preventative health care, “protecting” my environment, “educational” outreach programs, or a 0.5% return on decades of Social Security contributions.

    On game shows, when you win a prize, you sometimes have an option to take the cash value instead of the shiny object.  Why can’t we get that option from our domineering government bureaucracies?  It wouldn’t make socialism any better, but at least it would be more honest.

  10. Tom Lindholtz
    BlueAnt

    Fake John Galt: Where do I go to get my $19,266.00 at? You see that is the problem. They may be spending the money and assigning the expense to my name but that does not mean it is being spent on me or to even help me.

    Amen.  And give me that $19k in cash, I don’t want it portioned out into food stamps, “free” preventative health care, “protecting” my environment, “educational” outreach programs, or a 0.5% return on decades of Social Security contributions.

    I don’t even want it in cash.  I want my $19K in gold or silver.

  11. CoolHand
    George Savage:Given that we’re spending like Norwegians, why don’t we just pay Norwegian tax rates?

    Because if I wanted to be a Norwegian, I’d go live in Norway.

  12. CoolHand
    Fake John Galt: Where do I go to get my $19,266.00 at? You see that is the problem. They may be spending the money and assigning the expense to my name but that does not mean it is being spent on me or to even help me.

    What that actually means is that for me and you (and probably most people here on Ricochet), the .gov spends ~$50/yr for road upkeep and whatnot.

    For other people in your community (and you know who they are), they spend ~$60k/yr and still call them “poor”.

    This is the basic problem with the math in this post.

    By dividing the expenditures over the whole of the population like that, you are making the false implication that we all benefit from the spending equally, which is far far from the truth.

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