As the U.S. Economy Slugs Along, Government Spending Still Runs Amok


News reports last week headlined that U.S. 2011 GDP growth over the fourth quarter of the year was "the fastest in 1 1/2 years.” Real GDP growth in 2011 was 1.7%, down from 2010 growth of 3%. World markets tumbled, as most people on trading floors can read beyond headlines to real numbers. 

At the same time, headlined "Is Obama Creating a Nation of Dependents," which reported that 49% of American households now receive some form of government check. America's economy continues to grow at minimal levels, and if current spending levels continue, entitlement spending will overwhelm all revenues within a few short years. Government employees, law-makers, and separate bureaucracies at federal, state and local levels combine to make an unwieldy, unaffordable, potentially un-reformable system that consumes vast resources in an inefficient, unsustainable manner.

Many people lack familiarity with daily life, prices, wages, and benefit amounts in the countries that are frequently cited as "models" for a "responsible socialist society," and thus are little-able to compare factors such as the amounts that countries like Canada, Germany, and Scandinavia spend for medical care or public benefits. Americans think they spend little on the poor; in truth, they spend a lot. For example, an average skilled nursing facility in California is reimbursed for approximately $6,500 a month for long-term care, while Alberta, in the mid-range of Canadian provinces, will pay $1,800 a month to similar facilities for the same and potentially even higher-quality care. In Mississippi, America's poorest state, similar facilities receive approximately $2,100 a month per patient under extraordinarily complex regulations. Too often, the money doesn't reach the people it's intended to help. A lot of money goes astray as it wends its way through America's complex, multi-layered bureaucracy; the money may even be increasing income inequality – for example, enriching owners of skilled nursing facilities, low-income housing developers, and sub-standard inner-city grocers.

America's social and health programs are broken into a thousand, costly pieces, with separate fiefdoms and accounting at all levels of government and segment of spending. University of Arizona economist Price Fishback's study, "Social Expenditures in the United States and the Nordic Countries:  1900-2003" presented to the 2009 World Economic History Conference in Utrecht, Netherlands, covered extensive historical data indicatingthat when all government social spending, tax breaks, and other benefits are added together, America spends more per-capita on its government social and health programs than any of the Scandinavian countries. The U.S. government redistributes income and benefits in cash, subsidies, tax breaks and employer mandates, including Social Security, Medicare, housing subsidies, workers compensation, disability payments, and food stamps, a program unknown in the rest of the world.The "Supplemental Nutrition Assistance Program" (SNAP), as Food Stamps are now called, isn't even the only food assistance program. The U.S. also distributes commodities, subsidizes agriculture directly, and gives WIC (Women, Infants and Children) coupons to mothers with children under 5 years of age. Inner-city and rural stores advertise heavily that they accept WIC, while fast food restaurants post signs that they accept EBT cards (Food Stamps and welfare benefits). These programs are completely interwoven with our economy. Cutting them off would cost jobs, at least in the short term.

Half of America's politicians continue to advocate for higher taxes to support more spending with zero evaluation of the effectiveness or benefit of what is purchased for taxpayer dollars. If past performance is the best indicator of future behavior, the other half cannot be trusted to make any changes whatsoever. Democrats resemble enabling, co-dependent parents who'll drive to an addict's crack house with funds for a fix, and Republicans act like the blustering, angry parent who "forgetfully" leaves his wallet out for the money to be stolen. Neither is anywhere near staging an intervention focused on the reality of government spending. 

We are spending out of control, and scarcely know what we spend or get for our government dollars. We are in extraordinary denial about the reality of out of control government spending that, crucially, isn't achieving what people want. Right now, we are co-dependent to the point where we cannot conceive of saying, "do better," or "enough.”

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