Years ago, Alexis Tsipras, the party leader of Greece’s Coalition of the Radical Left, surprised me with a question. “Here in the United States,” the soon-to-be prime minister asked me over breakfast in New York, “why do you not have this phenomenon of passing money under the table?”
The subject was health care. Greece has a public health care system that, in theory, guarantees its citizens access to necessary medical care.
Practice, however, is another matter. Patients in Greek public hospitals, Tsipras explained, would first have to slip a doctor “an envelope with a certain amount of money” before they could expect to get treatment. The government, he added, underpaid its doctors and then looked the other way as they topped up their income with bribes.
Take a close look at any country or locality in which the government offers allegedly free or highly subsidized goods, and you’ll usually discover that there’s a catch.
France’s subsidized day care is, by all accounts, fantastic for working parents who get their children into it. Except there’s a perpetual shortage of slots. In Sweden, a raft of laws protects tenants from excessively high rent. Except wait times for apartments can be as long as 20 years. In Britain, the National Health Service is a source of pride. Except that, even before the pandemic, 1 in 6 patients faced wait times of more than 18 weeks for routine treatment.
These examples are worth bearing in mind as President Joe Biden charts a course toward the largest expansion of government since Lyndon Johnson’s Great Society. After signing a $1.9 trillion COVID-19 relief bill in March and proposing a $1.5 trillion discretionary budget in April (a 16% increase from this year, on top of what’s likely to be at least $3 trillion in mandatory spending on programs like Medicare and Medicaid), the president wants $2.3 trillion more for infrastructure and $1.8 trillion for new social programs.
That’s $7.5 trillion in discretionary spending. To put the number in perspective, we spent $4.1 trillion in inflation-adjusted dollars over nearly four years to wage and win the Second World War.
What will America get for the money? The progressive bet is that it will be things Americans like and want to keep, like universal pre-K and paid parental leave. Progressives also bet Americans won’t mind that the Jeff Bezoses and Elon Musks of the world will pay for all of it.
Maybe those bets will pay off. And conservatives would be foolish to dismiss the sheer political appeal of the progressive pitch. But before the U.S. takes this leap into a full-blown American social-welfare state, moderates in Congress like Sen. Joe Manchin or Rep. Jim Costa ought to ask: What’s the catch?
It isn’t that the things Biden wants aren’t worth having. Many of them are. Nor is the mammoth expense the main issue. Worthy things are often worth paying for. And Republicans have as much credibility on the subject of deficit spending as they do on matters of moral character in high office.
The real catch is that massive government spending has hidden costs that are difficult to capture in numbers alone.
Take another look at Europe. Why does R&D spending in the European Union persistently lag that in the U.S., to say nothing of places like Japan and South Korea? Perhaps it’s the same reason that European states cannot adequately meet their defense requirements: Mandatory spending on social-welfare priorities tends to crowd out discretionary spending.
Why does Europe’s tech startup scene (with notable exceptions) so notably lag its competitors in the U.S. and Asia? Perhaps it’s the same reason that Europe’s overall share of the world economy has been continuously shrinking despite decades of peace and economic integration: Big social safety nets typically come at the expense of risk-taking and economic dynamism.
And why is France, which, according to the Organization for Economic Cooperation and Development, spends more on social welfare than any other nation in the developed world, such an unhappy place, with chronically high unemployment, endless labor unrest, a decades-old brain drain, rising political extremism, a wealth tax that failed and a medical system that was on the brink of collapse long before COVID-19 struck?
The answer is no doubt complex. But anyone making the claim that massive government spending on social priorities will take us to the Happy Place needs to address the French example with something other than glib references to joie de vivre.
In his speech to Congress, the president described his jobs plan as a “once in a generation investment in America itself.” Some of what he offers will be popular with the public, and much of it will be popular with all the lobbies that will benefit from opening spigots of public money.
But investments like these, once made, are almost never reversed. The spending will become permanent. Beyond the gargantuan cost, Congress should think very hard about the real catch: transforming America into a kinder, gentler place of permanent decline.