When it Comes to Spending, the US Is a Typical Western Welfare State
Comparing Across States
Contrary to the enduring myth that the United States is spends next to nothing on social benefits, the US is hardly an outlier when it comes to the amount of public spending devoted to social benefits.1
In fact, as of 2012, the most recent year available for international comparisons, government spending on social benefits is equal to 18.7 percent of GDP in the United States which places it between Australia and Switzerland:
The average for all countries in the OECD lies between Switzerland and Norway at 21.4 percent.
The US spends more on social benefits than Canada and Australia, although those two countries have international reputations for being "humane" and "generous" with their social benefit while the US is supposedly the equivalent of a Mad-Max-style system of social Darwinism.
Moreover, in this respect, the US is similar to two countries that function under the much-touted "Nordic Model" (i.e., Iceland and Norway) with Iceland's social spending coming in below the US at 17.5 percent. Norway, meanwhile, sits a mere three percentage points above US spending at 21.7 percent.
Nor does any of this take into account the many tax deductions and tax credits intended to augment social benefits. When those are included, the US ranks second-highest in the world in terms of "social expenditure."
Looking at these numbers, one is left asking, "at what point does a welfare state become 'generous'?" If we are to assume that the Nordic states of Iceland and Norway spend the "correct" amount of taxpayer funds on social benefits, by what standard does the US spend the "incorrect" amount of funds? Perhaps a welfare state becomes "humane" at 20 percent, and the US's 18 percent is "inhumane." Does that mean Switzerland's 19 percent spent on social benefits is the incorrect amount?
Critics of US welfare policy, of course, may claim that how the money is spent makes all the difference. That may or may not be so, but it should be apparent at this point that even for those in favor of expanded welfare programs, what is not necessary is more tax revenue and more spending. If policymakers wish to tinker with the nature of government interventions in the name of decreasing poverty, they can clearly do so without the need to claim that additional government revenue is necessary. The volume of social spending in the US places it well within the fold of numerous other Western welfare states. (Many of us would like to see this spending reduced or eliminated, of course, but for the purposes of this article, it can suffice to simply point out that the US already spends immense amounts of resources on social benefits.)
But perhaps some of these misperceptions about comparisons between the US and other states stems from outdated information. Perhaps, in the past, the US was notably different from other welfare states?
To a certain extent, this would be correct. In 1980, there was a larger spread in spending than what we see now. That is, in 1980, the US spent less than half of the biggest-spending state (i.e., Sweden). In 2012, though, the US's spending level was more than half the biggest spender in 2012, which was France. There has indeed been a bit of a convergence between the US and other welfare states in recent decades. However, it would be wrong to say there has been a majorchange over this time.
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