You Can’t Forever Rob Peter in Order to Pay Paul

U.S. Embraces Model That's Failed Europe

The newspaper headlines say it all. On the one hand, "Crisis Imperils Liberal Benefits Long Expected by Europeans," while in this country: "Private Pay Plummets, Government Handouts Soar."

The modern European welfare state has proven unsustainable. From Greece to Britain, from France to Portugal, European countries are slashing social welfare benefits, raising the retirement age and dismantling government bureaucracies. Yet, even as Europe is learning that you can't forever rob Peter in order to pay Paul, the U.S. is racing to transform itself into a copy of the failing European model.

Greece has been the face of the crisis thus far, with a national debt that equals 108% of GDP, and talk of service cuts sparking spectacular riots in Athens. Spain had its credit rating cut two weeks ago. But Hungary might well be the next debt-explosion poster child: The prime minister's spokesman began openly using the word "default," sending markets into a further tizzy.

But how much better off are we? Our national debt just topped $13 trillion. The Congressional Budget Office projects it will equal 90% of our GDP by 2020. The U.S. government spent $83 billion more than it took in last month, and that figure is expected to exceed $1.56 trillion for the year.

Faced with this rising tide of red ink, our Congress blithely enacted a new multitrillion-dollar health care entitlement. It's now engaged in a debate over legislation repealing a scheduled cut in Medicare reimbursements and further extending unemployment benefits.

Of course, if one points out that we are driving the country toward bankruptcy, the traditional response in Washington is that we must have the "courage" to raise taxes. The Obama administration is preparing to allow Bush era tax cuts to expire, leading to a big jump in income and capital gains taxes.

The health care bill that just passed contained more than $569 billion in tax hikes between now and 2019. And many in the administration and Congress are now pushing for a Value Added Tax (VAT), a sort of federal sales tax imposed at every level of a product's production.

If taxes could solve the problem, Greece would be bailing out the U.S. Taxes currently take a third of Greece's GDP, roughly double the U.S. tax burden.  It would be even higher, but the absurdly high tax rates have led to widespread evasion. Greece soaks the rich with a top income tax rate of 40%. It even has a 21% VAT.

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12 Comments (+add yours?)

  1. Syrin from Wasilla
    Jun 09, 2010 @ 13:45:00

    There are many reasons why America seems to be following th is seemingly failed European model..
    We embrace the European economic model because we embrace their altruistic morality. Altruism states that one has a duty to self-sacrifice to the needs of others. Which are usually those who make no sacrifice of their own. Until we reject altruism and replace it with the morality of self determination that America was founded on, our welfare state will continue to expand, no matter how much economic destruction ensues.
    Some feel that our government is not embracing it for everyone's good so much as to cripple or hobble, if not outright collapse the US economy.
    Like many things the truth is somewhere in the middle…

    Reply

  2. ken
    Jun 09, 2010 @ 14:20:00

    don't even have to go over to the old country of lords ans castles,just look at canada,or argantina,it doesn't work,most kids learn these simple rules when they run a lemonade stand or deliver newspapers.somehow when they get elected to office they forget……….

    Reply

  3. viva
    Jun 09, 2010 @ 14:47:00

    What is so wrong with facts that you haven't bothered to do any research of your own? It wouldn't have hurt you to get the facts straight.If you want to publish rubbish you are more than capable of creating your own. Re-publishing someone else's mistakes is amateurish, dishonest and lazy.

    Reply

  4. Syrin from Wasilla
    Jun 09, 2010 @ 15:44:00

    Appreciate your comment, but, what rubbish are you referring to? The national debt just topped $13 trillion. The Congressional Budget Office projects it will equal 90% of our GDP by 2020. The U.S. government spent $83 billion more than it took in.. The facts on the healthcare reform are straight from congressional Joint Committee on Taxation.
    You got me, I am an amateur! However, I'm not dishonest or lazy.. I republish well thought out and articulate articles that I may agree with or feel a debate could be opened up by the contents. Here's another source
    In all, the bill would generate $409.2 billion in additional taxes by 2019, according to an analysis by the congressional Joint Committee on Taxation, a nonpartisan agency. The bill also imposes about $69 billion more in penalties for individuals and businesses who don’t meet mandates to buy insurance, according to the Congressional Budget Office, another nonpartisan agency.

    Reply

  5. Syrin from Wasilla
    Jun 09, 2010 @ 16:00:00

    Columnist Charles Krauthammer points to Obama deficit reduction commission as prelude to national sales tax that will fund ObamaCare- Similar to the VAT tax that pays many entitlements in Europe.

    Reply

  6. Syrin from Wasilla
    Jun 09, 2010 @ 16:06:00

    Simply put
    Too many entitlements and not enough people to pay for them always causes chaos and despair.

    Reply

  7. Cryin' for the Dyin'
    Jun 09, 2010 @ 16:52:00

    Hello..true there are no easy answers..everyone has a position.
    I think the only way to make it work..now..in medicine and education..is to socialize. For some..because they have a defined position..or because they fear something of another name..or supposed catagory..this is an unacceptable situation..it is not communistic..it is not socialistic..it is a democratic republic recognizing the fact of high population and limited resources..it is not large government..certainly not any larger. It is an attempt..once again..at bringing equality..to everyone..even the poor. We would have a lot more money without war..illegal interest rates..and corruption of the all important issues concerning human and civil rights.
    As far as the dismal situation of the economy..it is left by and large to each his own..as reflected..truely in my first statement.
    Sometime back..just last year..I posted some things on the conspiricies and so called 'smart' people..that apparently and laughingly, in some cases, do bad loans. They could not lose because they write off their losses. They deduct their expenditures..and 'entitlements' called titlements are small potatoes by comparison. These jerkwads turned loans and projected incomes from bad loans..into collateral on 'solid' places in the economy..the deductions were paid with your taxes. Loans where people in need of 'cash money' and toys for the bush..were their own default. Right into international finance.
    I maintain..knock off the war..if civilized behavior is the intent..act civilized..feed..educate and give health benefits to everyone. Even the corrupt and poor.
    The idea is..with these worthy social intestments..this situation..recurrent in history..will be banned to obselesence. It is not only possible..it is a lot more viable than anything that is destructive from the gate.
    My sibling once said to me..not long ago..'War? Forget it..who's going to stop Iran from bombing people?' I answered..very quickly 'whos going to stop the United States from bombing people?' The world is just too damn small for petty name calling, nationalism, beyond common rights and constitutional implement..no one who endeavors to have money..will be stopped by such a plan. They will just be far less likely to be mugged..or lose their children or homes to war.
    Enough and thank you..it does go on..it is always up to the person in the mirror..after all..in honesty..in times of ephipheny or great personal truth..we live alone..as we die alone..
    Peace Tony

    Reply

  8. Snowy
    Jun 09, 2010 @ 17:24:00

    Then of course there's countries like Australia and New Zealand who have had Universal Health Care for decades. Let's see how they stack up with the U.S. using the CIA World Fact book as reference. U.S. Unemployment 9.4%, Public Debt as percentage of GDP. 39.7%. Australia: Unemployment 5.7%. Pubic Debt 18.6% of GDP.New Zealand: Unemployment 7.3% Public debt 29.3% of GDP.Makes you kind of wonder where all the money is going in the world's richest country. Maybe this will give a clue.

    Reply

  9. Syrin from Wasilla
    Jun 09, 2010 @ 17:39:00

    Thank you for your comment. Again, you're very articulate and gives one something to think about. I appreciate your perspective and it's true there are no easy answers. But, it seems that the economic fact of the long term viability of this kind of system is that there will certainly be more people taking out of the system than putting into it.
    Here in the US are resources limited and population too much to bare the private medical and heath system? I have always agreed we need reform, but, not to include this heavy tax burden or mandated personal purchases..
    Nothing really new here, given a chance who won't want to get something for nothing compared to having to work for? Well, as we move into this newly named democratic republic, I hope it works..
    🙂

    Reply

  10. Syrin from Wasilla
    Jun 09, 2010 @ 17:43:00

    Thanks Snowy for the comment…So why isn't Australia and New Zealand being reference as a model for the US? Who can I talk to?

    Reply

  11. Snowy
    Jun 09, 2010 @ 18:07:00

    Who can I talk to? Er, me? ;o) But you make a good point, Syrin. We depend on the media for our information, and unbiased media reporting from both sides is a rare commodity. Added to this, the political system is corrupted by business lobbyists pushing the interests of the one percenters. I was rather staggered to see the amounts spent by candidates in the primaries, and the thought ran through my mind, "How can those people relate to the problems facing the bottom 40% referred in the graph above?" Which I think probably answers your question as to why countries such as Oz and NZ aren't being referenced in the public debate. It's because the top 1% who control the media don't want them to be referenced, as the one percenters are doing very well as things stand, thank you.

    Reply

  12. Cryin' for the Dyin'
    Jun 11, 2010 @ 16:35:00

    Hello..Well all that is true enough..I apologize for the lateness of this reply..We, of course..will never know..until war is stopped..abolished..done in..and rendered the obselesence it deserved centuries gone..I do remember 'pledging alliegance in school..'and to the republic for which it stands..one nation..(in 1955 I believe they added..'under God)..those are names..Snowy has a point on the stat. side..without jobs..even those healthy in this country and other western places..are in a political 'pickle'.. people are hungry and sick..obviously in need of education..right now..the missionaries have done what they can..the developers use them and when they cannot buy them..they buy the folks that implement laws..of all kinds..to make use of the indigenous populations..I think if government is going to have any effective use at all..they will have to recognize need in the masses..it has been tried in experimentation..now we are down to the brass tacks of resource and space..I just had a thought about the 'Foundation Series'..a trilogy by I. Asimov..in the area of populated planets..he got very creative..: )Peace Tony

    Reply

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