In a previous post I used some information that has since been corrected on the original site, Business Insider due to in-depth research into the actual OECD numbers by myself and others. It turns out that the United States spends 16.2% of our GDP on social programs, NOT 7.2%. But as I investigated further into the actual OECD numbers itself, file number, EQ5.XLS, data file EQ5.2 column (C) I have found something even more disturbing.
The United States spends 16.2% of our GDP on social programs and Canada spends 16.9% on theirs and an even closer comparison, Australia spends 16%. These two countries spend the same amount of their GDP to ensure a comfortable standard of living for their citizens as the United States does, yet we do not have the same outcome.
For instance, America does not have a single payer health insurance system that covers everyone, our single payer only covers the elderly and even that program is under assault [see Paul Ryan's voucher system proposal]. Both Australia and Canada have single payer that covers every single citizen in their country.
Another difference is America’s unemployment insurance, we normally give the unemployed 26 weeks of benefits, unless we are in a deep recession as we are now. In Australia unemployment benefits are unlimited. Being unlimited in Australia there are more requirements to be met by the citizen, such as employment search programs and educational programs to increase your employment opportunities.
The current debate in Washington D.C. about austerity measures takes direct aim at our social contract. The conservatives are blaming our so-called broad safety net as the reason for our debt. If that is an argument they would like to have, great, I am all for it. Let’s take a look at Canada’s and Australia’s national debt and percentage of GDP.
According to a conservative group’s numbers in Canada, their public debt is 561 billion dollars. The current GDP of Canada is 1.3 trillion dollars, so their debt is only 50% of GDP. In Australia, their GDP is approximately 1.2 Trillion, and their national debt is, 22.4% of GDP or approximately 264 billion in public debt.
Here in the United States, our national debt is 14 trillion dollars and our GDP is about the same. We are running close to 100% of our GDP. If the social safety net is the problem, why aren’t our closest statistical neighbors feeling the same budget pressures.
Both of these countries spend the same percentage of GDP on their programs as the United States, yet the national debt is less and they get more under their programs. Something is wrong with our system. It’s not that our safety net is too broad or over-bearing as the conservative would like you to believe.
Something else is skewed, maybe these countries don’t spend as much subsidizing multi-national corporations, worth hundreds of billions of dollars, they also have a smaller military budget. But to blame the safety net of the United States as the problem is purely ideological, and not realistic at all.
Related posts:
Very good points Ray – also, they are not spending billions fighting two wars.
Thank you
you leave out medicaid too. Add medicare, medicaid, SS to welfare and you are around 54% of federal spending. Using the same site you used for your flawed analysis.
Tyson, I believe you make Ray’s point even stronger!
Let’s assume what you are saying is true, and further assume that medicare, medicaid, and SS are programs that individuals don’t pay for out of their paychecks (which they do) and that they should be eliminated (since we don’t care about anything but money). Even so, Ray’s point is that other industrialized countries pay 16-17% of their GDP towards social programs, but have free healthcare for all and better social programs overall; like general education and higher education. Childcare is free in many industrialized nations. This, I believe, shows that social programs such as these are NOT the cause of our financial situation.
Cute how this analysis pretends SS and Medicare are not social programs. Add them to spending and it is over 50%
http://www.usgovernmentspending.com/classic
ahh just realized (my fault) you are showing a graph with federal expenditures but then using numbers compared to GDP. confusing and misleading
SS and Medicare are funded by payroll deductions, and the programs are therefore paid for by the people who use them. Quite different from welfare and mediciad. Apples and oranges, Tyson, apples and oranges.
Nicely presented Ray, but the other half of the equation is to determine how the revenue streams differ. How much do each of those countries have coming into the budget and where does that money originate?
I ask honestly because I do not know and hopefully you might?
Cheers.
America’s debt is caused by slashing revenue by not taxing/enforcing taxation on the rich and corporations coupled with a military-industrial complex on steroids. Fix those, you fix the debt problem, but you won’t get there by electing Republicans or conservative Democrats.
You are right. Our revenue has went down every year since 2000. And I only use that year because thats as far back as I looked. I am not sure why the GOP wants to cut out all government income unless its to get rid of programs that are for Americans. As we seen in the Montana article its clearly not becuase they care about Americans
http://www.usgovernmentrevenue.com/federal_revenue_chart
revenue went down 2001-2003 with the recession and then again from 2007-2009.
“Our” revenue? What the heck does that mean? Do you mean “My” money? Revenue = “earnings”. The government doesn’t earn anything. It continues to grow need to feed itself.
This will be a foreign concept possibly, but we are Americans. The revenue is “ours”. Revenue = income, not earnings
Nice job Ray–I have not seen anyone approach the question this way, and it’s intriguing.
Thank you, Cassandra
I appreciate this article as well. It’s amazing that these self-centered conservatives don’t look at the big picture or understand that running a government is a different story from running a household. The draconian cuts the Party of No proposes will do absolutely nothing to bring jobs or address the deficit. They like to run on about runaway spending, but they think nothing of addressing problems like the bloated defense budget or the exorbitant tax breaks for corporations, compared to which the spending for social programs is a drop in the bucket.
Thank you very much Anne
Thanks Ray. I love how these conservative trolls pretend that governments and households follow the same rules (which is against basic economics – did any of them take economics in high school?). And most people believe them. So if we tighten our belts, things will improve they say. That’s not true for macroeconomics. In a recession, governments need to spend money. Money can be printed and distributed in such a way that there is no significant inflationary bounce – for example, spending money on social programs in the public interest. Otherwise, things will get much, much worse. Obama had the perfect moment to implement a single payer universal health care system and blew it.
We shouldn’t be spending as a percentage of GDP. we should spend what we take in. Of course we’re in debt if we think we can spend GDP. GDP is what the whole country produces. Lets say we have an average tax rate of 20%. That means our social programs leave us with 4% left over to “FINANCE” the rest of everything else. Stop financing things. Stop making the banks rich. This article is based on a false premise that we can spend all of the GDP.
No service,
I was pointing out our Debt = 100% of GDP, yet social programs in the United States = only 16.2%, which means we are not going broke due to our social spending.
Look both of those other countries spend the same amount of GDP on their social programs, yet receive so much more for their money
Social programs are social pogroms.
There are more factors than just GDP that determine government spending and debt levels. What are actual government revenues? How does government consumption differ? How are these programs administered? Canada’s public debt, by the way, is closer to 80 percent of GDP. The Google number you’re using is from 2009. Look at the Economist Intelligence Unit or Global Insight for current figures.
Secondly, I have no idea why you have that graphic up there. It portrays spending as a percentage of the government budget, not GDP, and as you can see, social programs combined comprise a huge percentage of government spending. So, maybe government revenues are down?
You can’t just grab nations with comparable GDP and levels of social spending, compare their debt levels and claim social spending is not responsible. There are other factors, including the fact that our NATO and ANZUS allies expect us to carry the bulk of the financial burden for those two alliances, which we do.
Oh, and by the way, since the OECD numbers were from 2007, and there was 0 GDP growth in 2008, and a 2.9 percent GDP decline in 2009, coupled with some very hefty stimulus spending. You don’t think that a decline in government revenue brought on by economic decline combined with more than $1 trillion in stimulus spending could account for a lot of our debt, as well as an increase in our percentage of social spending vice GDP in these two years?
First of all Nicki, I was grabbing countries with comparable spending on social programs in percentage of GDP, not comparable GDP entirely.
Canada spends 17% of 1.3 Trillion GDP on social spending Nicki, 219 Billion.
Australia spends 16% of 1.2 Trillion GDP which equal 192 Billion TOTAL
United States Spends 16.2% of GDP which equal 2.3 Trillion on social spending.
There has to be other BIGGER reasons for our debt, rather than social spending, regressives,like yourself would like to believe.
Australia and Canada are NOT in a debt crisis, that we are in. All 3 spend the same amount percentage wise of GDP on social programs., yet their DEBT is not eating away at their GDP the way our is.
Ray, take a look at my reply to your comment on my blog. I can repost it here, if you want, but I explain it pretty well there.
“Crisis” is a strong word regarding Canada, but their public debt is more than 80 percent of GDP. That’s quite a bit.
Here’s what I wrote in reply earlier:
Canada’s general government balance went from years of running surpluses to a deficit situation in 2008 and will continue through at least 2013. Do THEY think they’re in crisis? I have no idea. But they’re certainly not happy about it.
Australia has a relatively healthy economy compared to Canada and the US. Overall, they were pretty much shielded from the global economic crisis. They didn’t have to bump stimulus spending to cushion the effects of the global recession. And that’s why they didn’t have a debt crisis. This might change this year, though. Their budget deficit stood at 4.1% of GDP in 2009, but they’ve set a goal of 2013 to eliminate that deficit. That’s going to be difficult in light of the fact that they are funding post-flood reconstruction, which will bump social spending and probably their debt and deficit levels.
I would submit that you will see Australia in a debt crisis before long, and even Canada is pulling its fiscal stimulus package.
Secondly, calling me “regressive” doesn’t help your case. What I replied on my blog was: Social spending is not the root of our deficit and debt problems. Spending PERIOD is. Social spending just happens to be the largest portion of our government budget.
So of course, fiscally responsible people will focus on that!
Oh, and by the way, I’m not a Republican.
Oh, and also, I’m actually glad you guys removed the initial article you wrote. I’m sorry, but it was completely distorted.
Given the Regressive Republican argument that our social spending is the root of our deficit problems, why do these other two countries not have a debt crisis…yet spend the same percentage on social programs.
Folks- If you are in favor of increasing/maintaining social programs, what is stopping YOU from voluntarily paying additional taxes? (Crickets………………….I thought so)
Hilarious! Why not think this way instead of being a little on the jerky side? Take away all deductions and all loopholes in taxes. Everyone pays the same %, say 3%(whatever) of their wages. Our problems are over.
I’m actually totally in favor of that.
Since the wealthier voted for Obama, “we” are offering to do just that. Why do conservatives, who voted for McCain and were of the less educated and poorer segments of the country, telling others how to spend their money?
A lot of these other countries are not giving everything away to millionaires and billionaires while 50Million of their people have not a dime to see a doctor.They may have rich people too,but they are not allowing aprox.400 uber wealthy to tke it all and leave the citizens who make up the country,dying in the streets.Many countries have too much pride to do that! Look at just two cases,the govenors of Wisconsin and Michigan came into office,promtly gave millions to corporations in their states,and then said they had no money to operate the state,so would have to cut services for their citizens!And,in the case of Michigan,that govenor is even taking away citizens rights to have a city govt.in their town,and HE will tell you what you can and cannot do.It has to be against federal law,and there needs to be an investigation into these goings on Yesterday!
[...] don’t necessarily get all that much from the “producers” in this country. As reported by PoliticusUSA’s Ray Medeiros, according to OECD numbers the U.S. spends an incredibly small amount of money on social services [...]