Europe Rethinking the Welfare State

The United States and Europe offer a fascinating political contrast just now. In Europe, notably in Germany, France and Great Britain, political leaders facing yawning deficits are trying to cut back on social spending. They're not really reconsidering whether they should continue to have the welfare states most European countries committed to after World War II, but they're trying to make welfare spending somewhat affordable and responsible — and at least in France face massive demonstrations that threaten to tie the country in knots. In the United States our current political leaders are working assiduously to beef up the welfare state to the kinds of levels that threaten to bankrupt European governments — and the demonstrations we hear about are Tea Party aficionados seeking to get the government to exercise a modicum of fiscal discipline.

In France the government has proposed to raise the retirement age from 60 to — quelle horreur! — 62. This has sparked protests, mostly organized by unions, which have included blockades of gas stations and fuel depots, strikes at refineries, rock-throwing and looting. French President Nicolas Sarkozy has ordered police to quell the demonstrations and seems determined to push his proposed reform through the parliament. But the uproar demonstrates how difficult it can be to take back a special privilege or a promise of "free" money once it has been proffered.

In Great Britain, where the news is that the advice of the late British economist John Maynard Keynes — to get out of recession by government "stimulus" spending — is being ignored in favor of the most extensive government spending cuts in 60 years, some cows are still sacred.

Free (i.e., taxpayer-paid) eye tests, prescription drugs and bus passes for the elderly will remain. Even as Chancellor of the Exchequer George Osborne announces cuts of $130 billion in government spending by 2015, he announced that spending for the National Health Service would increase, as would spending "in real terms" on education. Spending on police is slated to be reduced by 4 percent, but spending on "anti-terrorism" measures would increase.

Still the seriousness of the United Kingdom's effort to reduce government spending is apparent. Mr. Osborne says about 490,000 government jobs (about 8 percent of the 6 million such jobs) will be eliminated by 2015, many through attrition. The official retirement age will be raised from 65 to 66, and even tax money for Queen Elizabeth's household will be cut by 14 percent. A 12-month limit will be placed on jobless benefits.

When (or if?) such spending reductions actually go into effect, it is quite possible we will see protests in Great Britain as well.

What implications do such developments have for the United States? Even in European countries staring large-scale deficits in the face, reducing government overspending is difficult. A lot of people running for office in this country have promised to take a scalpel (or even a meat ax) to government spending, but, if elected, will they have the nerve to carry through? The most-recent Republican president, backed by solid congressional majorities, not only didn't really try, but expanded domestic discretionary spending faster than at any time since the days of LBJ's Great Society.

REPRINTED FROM THE ORANGE COUNTY REGISTER.

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