Is the U.S. a socialist country now?

By
Admin
– February 9, 2009Posted in: barack obama, GW Bush

Republicans are starting to use the “s” word a lot – socialism, in reaction to President Obama’s policies.  But an interesting article in Newsweek posits that we are already a socialist country…and we are on the way to becoming rather French-like.

Here are a few excerpts from the Newsweek article:

As the Obama administration presses the largest fiscal bill in American history, caps the salaries of executives at institutions receiving federal aid at $500,000 and introduces a new plan to rescue the banking industry, the unemployment rate is at its highest in 16 years. The Dow has slumped to 1998 levels, and last year mortgage foreclosures rose 81 percent.

All of this is unfolding in an economy that can no longer be understood, even in passing, as the Great Society vs. the Gipper. Whether we like it or not—or even whether many people have thought much about it or not—the numbers clearly suggest that we are headed in a more European direction. A decade ago U.S. government spending was 34.3 percent of GDP, compared with 48.2 percent in the euro zone—a roughly 14-point gap, according to the Organization for Economic Cooperation and Development. In 2010 U.S. spending is expected to be 39.9 percent of GDP, compared with 47.1 percent in the euro zone—a gap of less than 8 points. As entitlement spending rises over the next decade, we will become even more French.

This is not to say that berets will be all the rage this spring, or that Obama has promised a croissant in every toaster oven. But the simple fact of the matter is that the political conversation, which shifts from time to time, has shifted anew, and for the foreseeable future Americans will be more engaged with questions about how to manage a mixed economy than about whether we should have one.

The architect of this new era of big government? History has a sense of humor, for the man who laid the foundations for the world Obama now rules is George W. Bush, who moved to bail out the financial sector last autumn with $700 billion.

Bush brought the Age of Reagan to a close; now Obama has gone further, reversing Bill Clinton’s end of big government. The story, as always, is complicated. Polls show that Americans don’t trust government and still don’t want big government. They do, however, want what government delivers, like health care and national defense and, now, protections from banking and housing failure. During the roughly three decades since Reagan made big government the enemy and “liberal” an epithet, government did not shrink. It grew. But the economy grew just as fast, so government as a percentage of GDP remained about the same. Much of that economic growth was real, but for the past five years or so, it has borne a suspicious resemblance to Bernie Madoff’s stock fund. Americans have been living high on borrowed money (the savings rate dropped from 7.6 percent in 1992 to less than zero in 2005) while financiers built castles in the air.

Now comes the reckoning. The answer may indeed be more government. In the short run, since neither consumers nor business is likely to do it, the government will have to stimulate the economy. And in the long run, an aging population and global warming and higher energy costs will demand more government taxing and spending. The catch is that more government intrusion in the economy will almost surely limit growth (as it has in Europe, where a big welfare state has caused chronic high unemployment). Growth has always been America’s birthright and saving grace.

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About Admin

"Admin" is just editors Vern Nelson, Greg Diamond, or Ryan Cantor sharing something that they mostly didn't write themselves, but think you should see. Before December 2010, "Admin" may have been former blog owner Art Pedroza.