It has become a cliché to say that Europe, which is locked in a futile battle with the reality that its social welfare states are unsustainable, is a “cautionary tale” for the United States. Unlike most clichés, this is one that should be repeated as often as possible.
At a time when Europe’s voters desperately need to come to grips with hard realities, they seem to be retreating into a state of denial instead. France this week will swear in Socialist President François Hollande, whose solution to France’s fiscal and economic crisis is to tax the rich at 75 percent. This will undoubtedly chase job creators out of France, just as threatened U.S. tax hikes have chased job creators (including Facebook co-founder Eduardo Saverin) out of this country. Hollande’s policies will thus likely reduce jobs in an economy that desperately needs to create them, and reduce revenues for a government that desperately needs to raise them. Like President Obama with his “Buffett Rule,” Hollande offers a twisted and misguided notion of “fairness” that would hurt the struggling and vulnerable more than anyone else.
Meanwhile, in Spain, tens of thousands have taken to the streets to express their “indignation” — presumably at the laws of economics. And in Greece, radical leftists are now favored to win national elections that may occur next month.
We’re not yet at the point where Europe is — that’s the point of a cautionary tale. But we seem to be doing everything in our power to sink to that point. President Obama has now run up more debt in three years than his predecessor, the previous record-holder, ran up in eight. Annual budget deficits well in excess of a trillion dollars, unheard of until recently, are the new normal. Outlays for Medicare, Medicaid and Social Security are already approaching half of our budget; those outlays are exploding on autopilot, and will swallow up a rapidly growing share of our budget unless we institute serious entitlement reform. And at a time when we desperately need to get control of existing entitlements, we have added a new entitlement — Obamacare — that may prove to be the costliest one of all.
The following is an excerpt from my new book, Left-Hearted, Right-Minded: Why Conservative Policies Are The Best Way To Achieve Liberal Ideals. I wrote it a few months ago, but I could have written it a few minutes ago:
We’re on a completely unsustainable path where our children and grandchildren will have to borrow large sums of money just to pay the interest on the large sums of money that we’re borrowing today to spend on ourselves. We’re setting up a huge intergenerational transfer of wealth in the wrong direction. Rather than passing our wealth on to our children and grandchildren so that their lives can be better than ours, we’re passing our debts onto them to a degree that will cripple their opportunities. We are requiring them to foot the bill for our own lack of discipline and responsibility. Those who advocate budget cuts are often accused of lacking compassion. However, our failure to cut the budget betrays an astonishing lack of compassion for our children and grandchildren.
If we have any doubt where all of this is heading, we need only look across the Atlantic to the failing welfare states of Europe. Greece, for example, which has been living beyond its means for years, has been forced to adopt painful austerity measures as a condition to being bailed out by the rest of Europe. The announcement of these measures was greeted with widespread rioting. Clearly, the rioters believe that they are entitled to a welfare state that they can’t afford, even if the taxpayers of other countries have to pay for it. This is a cautionary tale of how people, once they get used to welfare state benefits, develop a sense of entitlement that overwhelms their sense of reality, responsibility and fair play.
Greek Finance Minister Evangelos Venizelos addressed the rioting in a speech before Parliament: “We have to explain to all these indignant people who see their lives changing that what the country is experiencing is not the worst stage of the crisis,” he said. “It is an anguished and necessary effort to avoid the ultimate, deepest and harshest level of the crisis. The difference between a difficult situation and a catastrophe is immense.”