Years ago Alexis Tsipras, the party leader of the Greek Coalition of the Radical Left, surprised me with a question. “Here in the United States,” the future prime minister asked me over a breakfast in New York, “why don’t you have this phenomenon of spending money under the table?”
The subject was health care. Greece has a public health care system which, in theory, guarantees its citizens access to necessary medical care.
The practice, however, is another matter. Patients in Greek public hospitals, Tsipras explained, would first have to slip a doctor “an envelope with a certain amount of money” before they can hope to receive treatment. The government, he added, underpaid its doctors and then looked away as they supplemented their income with bribes.
Take a close look at any country or locality in which the government offers supposedly free or highly subsidized products and you will usually find that there is a catch.
Subsidized daycare in France is, in every way, fantastic for working parents who welcome their children there. Except that there is a perpetual shortage of slot machines. In Sweden, a series of laws protect tenants against excessively high rents. Except that waiting times for apartments can go up to 20 years. In Britain, the National Health Service is a source of pride. Except that, even before the pandemic, one in six patients faced wait times of more than 18 weeks for routine treatment.
These examples are worth keeping in mind as President Biden charts the course for the biggest expansion of government since Lyndon Johnson’s Great Society. After signing a $ 1.9 trillion Covid-19 relief bill in March and offering a discretionary budget of $ 1.5 trillion in April (a 16% increase from this year, in addition to which will likely be at least $ 3 trillion in mandatory spending for programs like Medicare and Medicaid), the president wants $ 2.3 trillion more for infrastructure and $ 1.8 trillion for new programs social.
That’s $ 7.5 trillion in discretionary spending. To put the number into perspective, we spent $ 4.1 trillion in inflation-adjusted dollars over almost four years to fight and win World War II.
What will America get for the money? The progressive bet is that these will be things Americans love and want to keep, like universal, paid pre-K parental leave. Progressives are also betting Americans won’t mind that Jeff Bezose and Elon Musks around the world will pay for it all.
Maybe these bets will pay off. And the Conservatives would be foolish to reject the outright political appeal of the progressive step. But before the United States makes that leap into a true American welfare state, congressional moderates like Senator Joe Manchin or Representative Jim Costa should ask themselves: what is the problem?
It’s not that the things Biden wants aren’t worth the effort. Many of them are. Huge expenses are not the main problem either. Worthy things are often worth paying for. And Republicans have as much credibility when it comes to deficit spending as they do when it comes to morality in high office.
The real catch is that massive public spending has hidden costs that are hard to capture in numbers alone.
Take another look at Europe. Why is R&D spending in the European Union consistently lower than in the United States, let alone countries like Japan and South Korea? This is perhaps the same reason why European states cannot adequately meet their defense needs: Mandatory spending on social protection priorities tends to crowd out discretionary spending.
Why is the European tech start-up scene (with few exceptions) so clearly lagging behind its competitors in the United States and Asia? Perhaps this is the same reason why Europe’s overall share in the world economy has steadily declined despite decades of peace and economic integration: major social safety nets are usually built in to the detriment of risk-taking and economic dynamism.
And why is France, which according to the Organization for Economic Co-operation and Development spends more on social protection than any other nation in the developed world, such an unhappy place, with chronically high unemployment, labor unrest endless, decades-old brain? drain, rising political extremism, a failed wealth tax and a medical system that was on the verge of collapse long before Covid hit?
The answer is undoubtedly complex. But anyone who claims that massive public spending on social priorities will get us to Happy Place has to approach the French example with something other than flippant references to joie de vivre.
In his speech to Congress, the president described his employment plan as a “one-time investment in a generation in America itself.” Some of what he offers will be popular with the public, and much will be popular with all the lobbies that will benefit from opening the taps of public funds.
But investments like these, once made, are hardly ever canceled. The expenses will become permanent. Beyond the gargantuan cost, Congress should think very seriously about the real problem: to turn America into a gentler, gentler place of permanent decline.