Wednesday, January 28, 2009

Jim Manzi, writing on what the stimulus bill could see us living with for a long time:
I tried to go quickly through the spending for all categories and crudely map them to the OECD classification system that allows for the comparison of spending across governments in the developed world. The huge categories of spending under this bill that I could map to categories other than “General Spending” are in Social Protection (~$90 billion), Education (~$90 billion) and Environment (~$55 billion). Interestingly, Defense represents only about 3% of the spending in the bill (as opposed to 12% of U.S. government spending overall, or about 3% of French overall government spending as a point of comparison) and Public Safety represents only about 1% of spending in the bill (as opposed to about 6% of U.S. government spending overall, or about 2% of French government spending overall). In other words, the net effect of this bill is to shift the distribution of U.S. government spending as a whole away from defense and public safety and toward social programs: for good or ill, to make the U.S. into more of a European-style social welfare state. Because the amount of spending is so huge, this will be a material, not notional, shift. Eventually, we will emerge from this recession/depression/whatever it’s going to be. When that happens, is this really the kind of government we’re going to want?

And this change is unlikely to be temporary. Imagine two illustrative scenarios. First, the U.S. goes through a fairly standard recession and emerges by about late 2010 into a recovery. The government, subject to normal grumbling, is mostly given credit for handling things the right way. Obama is reelected in 2012 and Democrats retain control of Congress. Or second, we enter and new Depression, or more likely, a Japan of the 1990s long-term recession. Unemployment is stuck well above 10%. The mood of the country is deeply pessimistic, and government programs are a lifeline for a good chunk of the population. In which of these two scenarios is it realistic to expect that the 2009 increases to food stamps, unemployment compensation, healthcare benefits or HUD housing assistance will really be rolled back in 2012-2015? Neither, as far as I can see.


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