To say that the U.S. government is a profligate spender of OMP – other people’s money – is such an understatement it borders on the hysterical.
Yes, our government has a spending problem. And because of that, it also has a management problem, a waste, fraud and abuse problem, and a taxation problem.
High taxes (well, for some income groups) feed an insatiable federal leviathan that then uses our money to pick certain winners in the corporate world (think incentives) while buying off key voter constituencies with taxpayer money (think welfare, SNAP, Obamacare and other government subsidies).
It’s all gotten quite out of hand. Our government has spent trillions more than it has taken in. Our debt-to-GDP ratio is out of whack (it is projected to be more than 105 percent next year). We have more Americans on food stamps and welfare now than at any time in our history. Means tested federal and state aid programs now number around 80. Through it all, poverty rates have only increased – even though nearly 70 percent of federal spending goes to dependency programs.
Enter Sweden. It, too, used to be an economic basket case. But at some point in the early 1990s, the elected leaders of Sweden decided that the future solvency of their country was a helluva lot more important than partisanship and power, so they got together and did something about it.
As noted in a new report by Per Byland in the Mises Institute’s The Free Market, Keynesian idiots like The New York Times’ Paul Krugman – who adore big welfare states and somehow think “government money” that is forcibly taken from productive Americans and given to unproductive Americans is good for the economy – refuse to acknowledge the historic failure of government to create wealth:
During the recent financial crisis, Sweden has emerged as one of very few financially sound economies. …
In September of 1992 the Riksbank, Sweden’s central bank, raised the interest rate to five hundred (500) percent in a vain attempt to save the fixed exchange rate of the Swedish krona (Sweden’s currency). This drastic measure was taken in conjunction with large spending cuts and tax increases to address the free-fall of the nation’s economy. The economic meltdown was the culmination of two full decades of decline…
Since that time, Sweden has, across the board, seen consistent government cutbacks while increasing restrictions on welfare policies, deregulating markets, and privatizing former government monopolies. The country has instituted an overall new incentive structure in society making it more favorable to work. The national debt tumbled from almost 80 percent of GDP in 1995 to only 35 percent in 2010.
Sweden is an interesting case to study. We do indeed, as Krugman repeatedly tells us, have much to learn from it: from the long-lasting era of economic growth thanks to free markets to the rise and fall of the welfare state. The country’s recently (re)gained financial strength and its ability to resist a global recession are due, not to a strong welfare state as Krugman claims, but to the long-term rolling back of the expansive welfare that Keynesians so often praise.
There are some members of one party in Washington who still advocates cutting the size of the leviathan, reducing the welfare state, cutting regulatory burdens and getting the government out of the business of trying to run and manage business, and none of them belong to the Democrat Party. But they are regularly dismissed and derided.
If we are to have a prayer of preventing the United States from plunging head first into the fiscal abyss, priority number one has to be getting rid of the lunatics who are running the asylum. And that starts with the leadership in both parties.
While the people of Sweden pushed their leaders to act responsibly to prevent the kind of fiscal disaster that would have meant, literally, the end of Sweden, we know our own Socialist-in-Chief, Barack Obama, and his sycophantic love children in Congress and the federal bureaucracy, won’t willingly do what’s right.
So they will have to be forced to do it.
Becoming fiscally responsible and less reliant on big, fat, bloated government will cause some pain for a while, but it’s a pain we simply have to bear if we are serious about our survival.