One of the problems with an administration as comprehensively awful as Barack Obama’s is that people can’t keep track of all the crises. His foreign policy has collapsed, the economy is on life support, unemployment and poverty are at record-breaking levels, scandals pile one upon another. And–oh yes, don’t forget–the country is $17 trillion in debt.
Mark Steyn refers to the U.S. as the brokest nation in history, and in purely quantitative terms–$17 trillion–the proposition is not debatable. But Cato’s Dan Mitchell takes the analysis a step further. This chart, from the Organization for Economic Cooperation and Development, suggests that the U.S. is in worse fiscal condition than any developed country other than Japan and New Zealand. Greece? We should be so lucky!
But Dan isn’t crazy about this measure of fiscal ineptitude:
I’ve never been happy with these BIS and OECD numbers because they focus on deficits, debt, and fiscal balance. Those are important indicators, of course, but they’re best viewed as symptoms.
The underlying problem is that the burden of government spending is too high. And what the BIS and OECD numbers are really showing is that the public sector is going to get even bigger in coming decades, largely because of aging populations. Unfortunately, you have to read between the lines to understand what’s really happening.
But now I’ve stumbled across some IMF data that presents the long-run fiscal outlook in a more logical fashion. As you can see from this graph (taken from this publication), they show the expected rise in age-related spending on the vertical axis and the amount of needed fiscal adjustment on the horizontal axis.
In other words, you don’t want your nation to be in the upper-right quadrant, but that’s exactly where you can find the United States.
Yes, Japan needs more fiscal adjustment. Yes, the burden of government spending will expand by a larger amount in Belgium. But America combines the worst of both worlds in a depressingly impressive fashion.
So thanks to FDR, LBJ, Nixon, Bush, Obama and others for helping to create and expand the welfare state. They’ve managed to put the United States in a worse long-run position than Greece, Italy, Spain, Portugal, France, and other failing welfare states.
Well, some of those individuals have contributed more than others. But let’s not forget that no president has the power to spend a nickel: all appropriations come from Congress. In truth, a corrupt bargain has been struck between the political class and a majority of voters–fluctuating, often reluctant, occasionally remorseful, but always enough to send big spenders back to Washington. So far, there is no sign that the out-of-control locomotive that is the product of this corrupt bargain can be deflected until it has flown off the cliff. At which point, of course, it will be too late.