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The Twilight of the Welfare State?

THe New York Times

Wednesday, May 12, 2010

The debt crisis in Greece may have been temporarily eased by the European Union’s infusion of aid, but many analysts think that Europe’s debt problems and America’s are just beginning. Several analysts have noted that the welfare states in Greece, Spain and Portugal were greatly expanded in the 1990’s, leading to an extraordinary rise in the standards of living in those countries but also unsustainable spending. David Leonhardt of The Times and Robert Samuelson of The Washington Post this week compared the welfare state obligations in Europe to the entitlement burden in the United States.

How much should Americans fear the national debt as an aging population demands more services? What’s to be learned from the Greek experience, if anything?


Don't Fear the Debt

by James K. Galbraith


America has many problems. Unemployment. Dysfunctional banks. Catastrophe in the Gulf of Mexico. Afghanistan and Iraq. Energy and climate change. The national debt, Social Security and Medicare are not on this list.

Social Security places a modest floor under old people’s incomes — whether they have children who would otherwise support them, or not. It shifts the burden from workers with parents they would otherwise support, to all the other workers. Both transfers are fair. Both can go on forever — regardless of how many elderly we have.

Those who would cut Medicare are saying, let the elderly get less health care. But why? Just because their health care happens to be federally funded? That’s arbitrary, capricious, and cruel.

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