Friday, June 4, 2010

Canada and Welfare State Cuts

I checked out a TV in the guest room yesterday and in two minutes saw an ad for AARP's Medicare Supplement insurance and an ad by a lawyer advertising his services in applying for Social Security Disability benefits--the benefits "you deserve!"

It shows how central the welfare state must be in the lives of the TV-watching classes.

AARP's Medicare Supplement business is one of the untouchables in national politics.

And Social Security's Disability program already covers about four percent of the working population. I read an article a while back that predicted that the disability rolls would reach seven percent. Expect that number to be reached when we fully emerge from the current Man-cession in the next couple of years.

What will happen to the welfare state in the years ahead? Obviously we will hit a crisis. And liberals will suddenly realize that they need to trim the welfare state or go out of business.

In Canada, liberals reached that point in the 1990s, as Fred Barnes reminds us.

Canada was called an “honorary member of the Third World” by the Wall Street Journal in 1995, and for good reason. Out-of-control spending, soaring debt, and the government’s bite of the country’s gross domestic product (GDP) growing at a furious pace—those trends prompted the Journal’s harsh putdown.

The liberals in Canada's Liberal Party realized that something had to give. So they implemented draconian cuts in central government spending.

The results have been remarkable. In two years, spending declined 8.8 per-cent. The size of the national government dropped from 16 percent of GDP in 1994 to 13 percent. As debt shrunk, once-gigantic interest payments fell dramatically.

That’s not all. Canada’s version of Social Security was put on a sound financial footing. Only one large government entity with soaring costs has been left unreformed: the single-payer health care system.

Now Canada is trying to do something about its health care system, satirized a while back in the movie The Barbarian Invasions. According to Reuters:

British Columbia is replacing block grants to hospitals with fee-for-procedure payments and Quebec has a new flat health tax and a proposal for payments on each medical visit -- an idea that critics say is an illegal user fee.

Well, you can see that the Canadians are not that serious about cutting health care costs. Not yet.

But you can see the problem. Millions of people, like the folks watching those TV ads about government benefits, have organized their lives around the government's IV. If anyone tries to change the bottle of joy-juice, or even reduce it, it will produce enormous rage and resistance.

So, just like in Canada, we really need the liberals to get out in front. It is liberals that must carry the news to their supporters that the glory days are over. Will they? Would President Obama lead such an effort in 2012 after a chilling defeat in the November 2010 mid-terms?

Because if President Obama doesn't lead off, then it will be eight or ten years before another Democrat can lead his party towards a welfare state that recognizes limits on government largesse.

By that time we'll really be in trouble.

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