I’m often asked if I think America is trending toward becoming a European-style social democracy. My answer is: “No, because we already are a European-style social democracy.” 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.
In 1938—the year my organization, the American Enterprise Institute, was founded—total government spending at all levels was about 15% of GDP. By 2010 it was 36%. The political right can crow all it wants about how America is a “conservative country,” unlike, say, Spain—a country governed by the Spanish Socialist Workers Party for most of the past 30 years. But at 36%, U.S. government spending relative to GDP is very close to Spain’s. And our debt-to-GDP ratio is 103%; Spain’s is 68%.
At first blush, these facts seem astounding. After all, Spanish political attitudes differ dramatically from our own. How can we be slouching down the same debt-potholed, social-democratic road as Spain? There are three explanations, all of which point to a worrying future for America.
First, the American left is every bit as focused on growing government and equalizing incomes as the Spanish left. Despite arguments from liberals that tax increases on “millionaires and billionaires” are necessary for fiscal prudence, they are little more than a way to meet the single-minded objective of greater income equality.
President Obama’s proposal to eliminate the Bush-era tax cuts for households making over $250,000 a year would, on a static basis, reduce the deficit by only 5% annually. That still leaves 95% of the deficit to be paid by the middle class.