The debt-ceiling brouhaha diverts attention from the most fundamental economic issue we face: Do we want a European-style welfare state? If we do, how in the world are we going to pay for it?
Presidential candidate Barack Obama called for “hope and change,” but he was deliberately vague on the “fundamental change” part. In speeches as president both at home and abroad, he appeared to reject American exceptionalism and intimated we have much to learn from Europe, especially its cradle-to-grave welfare state.
Obama’s juggernaut passage of universal health care, despite severe budget and employment problems and the loss of his Senate super majority, bears witness to his determination to transform the United States into something more closely resembling Europe. Although many regard his term in office as a failure, he has nearly achieved his long-term objective. He has completed the foundation of the Europeanization of the American economy.
The European welfare state requires huge levels of public spending and taxation. Public spending in France, Italy and Sweden is more than 50% of GDP. Frugal Germany provides the lower bound at a “modest” 48%. Some of this public spending goes to the unfortunate, but the bulk goes to the middle class for retirement and health benefits.
(Excerpt) Read more at forbes.com …