Entitlements don’t ruin countries
What landed Greece in economic hot water wasn’t “wild government overspending” on entitlements.
Republicans such as Paul Ryan say the U.S. will “end up in penury like the Greeks” unless we drastically curtail spending on our social safety net, said Matthew O’Brien. But that’s a misleading scare tactic. What landed Greece in economic hot water wasn’t “wild government overspending” on entitlements. In fact, “Europe’s biggest problem countries don’t spend that much on social programs”—as a percentage of GDP, Germany, Austria, and France spend more. What troubles the likes of Greece, Spain, and Portugal is that the boom years left them with “inflated, uncompetitive wages.” Since they are part of the euro zone, they can’t print more money when their borrowing costs go up. Non-euro countries like Sweden and Denmark spend more than a quarter of their GDP on entitlements, but they can “never run out of money” because their central banks can always print more. So it is with the U.S. “We never have to worry about self-fulfilling prophesies of bankruptcy because we can never run out of dollars.” Yes, we need to raise government revenues and rein in health-care inflation. But that hardly makes us like Greece, nor does it portend the end of the welfare state.