The Less-Than-Generous State

The New York Times | Editorial

Thursday 16 August 2007

You would think that we were living in the lap of the Nanny State. One of the most puzzling facts of the political debate is how much traction Republicans still get from their calls to cut taxes and public spending, and how timorous Democrats are in arguing against them.

The United States has long had one of the most meager tax takes in the industrial world. America's social spending - on programs ranging from Medicare and Social Security to food stamps - is almost the stingiest among industrial nations. Among the 30 industrialized countries grouped in the Organization for Economic Cooperation and Development, only four - Turkey, Mexico, South Korea and Ireland - spend less on social programs as a share of their economy.

Long a moral outrage, this tightfisted approach to public needs is becoming an economic handicap. Shortchanging public health impairs America's competitiveness. If the United States is to reap the rewards of globalization, the government must provide a much more robust safety net - to ensure public support for an open economy and protect vulnerable workers.

The O.E.C.D.'s definition of social spending includes programs to help people overcome such challenges as old age, poverty and unemployment. It excludes most education and the tax deduction for mortgage interest, which in the United States benefits the well-to-do more than others.

The United States has long preferred financing some social goals with tax breaks, such as the deduction for company-provided health insurance or credits for dependent care. After adding in these breaks America still comes out sixth from the bottom in total social spending.

Abdicating responsibilities doesn't make them go away, it just pushes them onto the individual or the private sector, which often can't cope with the burden. That's most evident in companies' withdrawal of health benefits. In this country, according to an O.E.C.D. study, unemployment benefits replace, on average, 14 percent of workers' lost earnings. Of the 20 richest countries in the organization, only Japan's are lower.

For American workers, and voters, to accept the increased competition brought on by globalization, the public sector would have to provide much better social insurance than that.

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