Margaret Thatcher once quipped about the problem facing modern social welfare states: “They always run out of other people’s money.” Today, in country after country, we are seeing that prophetic remark coming true.
The headlines have been dominated by the problems of the so-called PIIGS (Portugal, Ireland, Italy, Greece, and Spain), which face the most immediate economic crisis and have required economic support from the International Monetary Fund and other European countries. However, even countries with relatively robust economies, such as France and Germany, are facing unprecedented levels of debt. Unless the countries of Europe reform their welfare states, they will face some combination of huge tax increases or default on their obligations, both explicit and implicit. The result will be social upheaval and continued economic stagnation. The tough choices facing those countries are playing out today in parliaments and on the streets. The future remains highly uncertain. But how much better off is the United States? Our national debt exceeds $16.4 trillion and is increasing at a rate of more than $3 million per minute. And that only represents the debt that is actually “on the books.” If the unfunded liabilities of Medicare and Social Security are included, then U.S. total indebtedness could top 800 percent of GDP.
Michael Tanner is a Senior Fellow at the Cato Institute.
Michael Tanner is a Senior Fellow at the Cato Institute.
Read Full Journal Here: Cato Journal, Vol. 33, No. 2 (Spring/Summer 2013).
