Here’s How Big the Left Wants to Grow Government

 

Love or hate Paul Ryan’s budget plans, at least they present a long-term vision for America and put a price tag on it. President Obama, on the other hand, likes to stick safely within the 10-year budget window. Based on his budgets, you would almost think the progressive project is pretty much complete other than raising the minimum wage, building some high-speed rail lines, and closing some tax loopholes.

Actually, left-of-center thinkers have some pretty big plans in store for America — even if like-minded politicians are reluctant to talk about them. But acclaimed University of Arizona sociologist Lane Kenworthy outlines one version of the progressive path to prosperity in his ambitious and must-read new book, Social Democratic America. Admitting that the “new hypercompetitive, risk-filled  economy” is here to stay, here is how Kenworthy would “safeguard against risk and enhance fairness”:

1. Universal health insurance

2. One-year paid parental leave

3. Universal early education

4. Increase in the Child Tax Credit

5. Sickness insurance

6. Eased eligibility criteria for unemployment insurance

7. Wage insurance

8. Supplemental defined -contribution pension plans with automatic enrollment

9. Extensive, personalized job-search and (re)training support

10. Government as employer of last resort

11. Minimum wage increased modestly and indexed to prices

12. EITC extended farther up the income ladder and indexed to average compensation or GDP per capita

13. Social assistance with a higher benefit level and more support for employment

14. Reduced incarceration of low-level drug offenders

15. Affirmative action shifted to focus on family background rather than race

Now some of these, broadly, are good ideas — including increasing the child tax credit and creating wage subsidies — though I would probably design and implement them differently from Kenworthy. I certainly sense Kenworthy is not a big fan of means testing, for instance. (Please keep in mind I have so far only read the first chapter, which is online).

But let’s focus on cost here. Kenworthy reckons his bold agenda would cost about 10% of GDP, which based on today’s economy is around $1.6 trillion a year. Can we afford that? Kenworthy, not surprisingly, thinks we can. He points out that in 2007, the peak year of the pre-crash business cycle, total US government expenditures — national, state, and local — totaled 37% of GDP. The Kenworthy plan would take that number to 47% of GDP. And as he points out, in most other advanced economies total government spending is well above 40% of GDP, with some, such as France and Sweden, above 50%. (See above chart.)

Kenworthy: “How can we pay for it? As a technical matter, revising our tax system to raise an additional 10 percent of GDP in government revenue is simple. Adding a national consumption tax could get and adjustments would take us the rest of the way.”

Three thoughts here:

1. Even without Kenworthy’s agenda, the aging of the US population will push up government spending and taxes. Over the past 40 years, the federal government has spent 20.4% of GDP, and raised revenue equal to 17.4% of GDP. It is certainly plausible that spending and taxes will need to rise 3-5 percentage point above that historical level anyway. And Kenworthy would add a considerable amount of spending and taxes on top of that.

Peth2.jpg2. Current total US government spending is roughly 39% of GDP, about 10 percentage points small than the euro zone. But as the folks at e21 have argued, employer-sponsored health insurance premiums in the US should should be added to that total just as euro zone health insurance premiums are. Although the latter is financed directly through taxation, the net effect of both is to leave after-tax income lower to pay for health insurance. So that’s about 6% of GDP. Others would also count as spending by another name the $1 trillion annually in federal tax expenditures. (Northwestern University’s Monica Prasad calls the US housing subsidies a kind of “mortgage Keynesianism.”) That’s another 6% of GDP.

3. So a plausible case can be made the US already has as big or bigger government than Europe. As AEI President Arthur Brooks has put it, “From the progressivity of our tax code, to the percentage of GDP devoted to government, to the extent of the regulatory burden on business, most of Europe’s got nothing on us.” While Kenworthy may be right that larger, richer, more urbanized societies demand more government services and social insurance, does America really want as much government spending and taxation as Kenworthy thinks it does?

There are 11 comments.

Become a member to join the conversation. Or sign in if you're already a member.
  1. Profile Photo Inactive
    @CrowsNest

    I wish we’d see more books like Kenworthy’s. His candor about his agenda, and the usage of the proper title, Social Democracy, is refreshing–if, all the while, given the trajectory of our politics, dispiriting.

    • #1
  2. Profile Photo Member
    @DannyAlexander

    Throughout most of the post-WWII era, (Western) Europe has been able to be Europe because America is America.  Obviously, I’m not the first to say so, but it bears repeating — with great frequency.

    Change the America part of that statement, and by 2060 — to use the future projection date from the chart above — the EMP attack from Khomeinist Iran will have made the original statement moot for both America and Europe.

    • #2
  3. Profile Photo Inactive
    @user_646399

    Since I can’t win the confiscation war, I have already made a separate peace. I work less than I could, earn less than I could, invest in the most tax-efficient ways. I would rather voluntarily reduce my standard of living than have what I produce progressively stolen. Combine that approach among producers with the fact that transfer payments already provide more disposable income to many who do not work compared to those who do – and speculate as to future growth of GDP vs. government expenditures. I don’t think the math works if the people don’t.

    • #3
  4. Profile Photo Inactive
    @billy
     While Kenworthy may be right that larger, richer, more urbanized societies demand more government services and social insurance, does America really want as much government spending and taxation as Kenworthy thinks it does? · · 1 hour ago

    Does that question even matter?

    America didn’t want Obamacare, but we got it anyway.

    • #4
  5. Profile Photo Inactive
    @BrentB67

    There are no good idea on that list. It is a rogue’s gallery of left wing nonsense and market interventions.

    • #5
  6. Profile Photo Inactive
    @user_646399

    It would be very interesting to tally up the cost of the 15 items on the list. Given a median income of 45K, on top of the present tax structure, it would be interesting to see who could pay it and at what marginal tax rates. Fascinating, really. Mr. P., any insight?

    • #6
  7. Profile Photo Member
    @Raxxalan
    civil westman: Since I can’t win the confiscation war, I have already made a separate peace. I work less than I could, earn less than I could, invest in the most tax-efficient ways. I would rather voluntarily reduce my standard of living than have what I produce progressively stolen. Combine that approach among producers with the fact that transfer payments already provide more disposable income to many who do not work compared to those who do – and speculate as to future growth of GDP vs. government expenditures. I don’t think the math works if the people don’t. · 1 hour ago

    Which is why in the end you’ll be forced too.   Serfdom means work is not optional.

    • #7
  8. Profile Photo Inactive
    @user_646399
    Raxxalan

    Which is why in the end you’ll be forced too.   Serfdom means work is not optional. · 1 hour ago

    They had a slogan for that in the USSR: “I pretend to work and they pretend to pay me.”

    • #8
  9. Profile Photo Inactive
    @johnlisker

    With Republicans like Ryan we don’t need Demoncrats.

    • #9
  10. Profile Photo Thatcher
    @TheScarecrow

    Can we afford it – who knows? If it were simply a problem of affording it, would that automatically make it a good idea to do all those things?

    Somebody once pointed out that if you add rabbits to the Australian ecosystem, you don’t get the Australian ecosystem, but with rabbits – you get a whole new ecosystem, and one with lots of unintended consequences (as they found out).

    Whoever thinks we’d be improving our economy, our citizenry, our culture, by providing all that would do well to go back and re-read Charles Murray’s “Losing Ground”. 

    Murray also has that glorious idea about how a person’s happiness results from “satisfaction”, which is gained from providing for himself what Murray calls “the stuff of life” – in short, everything that list above wants the government to provide instead.

    What kind of country would we really have if all this were put in place?  I don’t know, but I’ll bet not the one Kenworthy thinks we would.  (My cynical guess would be one involving a lot of surly Eloi, and walled-compound-protected Morlocks.) 

    • #10
  11. Profile Photo Member
    @CuriousKevmo

    The Title to this post implies there is a ceiling.  I’m pretty sure if we gave in on all 15 of those items, they’ve got another 15 right behind ’em.  

    • #11

Comments are closed because this post is more than six months old. Please write a new post if you would like to continue this conversation.