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D.J. Dionne’s Selective Memory

Writing for The Washington Post, E.J. Dionne argues that the debate about government spending in America is distracting people from the question how public and private resources can best be brought to bear in an effort to enhance the nation’s competitiveness. Other countries, he believes, are way ahead of the curve.

While the United States is not even sure we should have gone halfway toward providing health insurance to all of our citizens, other democratic countries long ago began using government to cover all their citizens—and have health costs far lower than ours.

Both statements are separately true but the implication—that government’s involvement drives down the cost of health care—is false.

Britain’s National Health Service, the largest public health provider in the world, operates at a far lower cost per capita ($2,560, compared to $6,096 for the US in 2007) but Britons pay a price for that. Their massive health bureaucracy “fails to recognize [their] humanity and individuality” and fails to meet “even the most basic standards of care.” That is, according to the National Health Service’s own Ombudsman. Costs are controlled by rationing and with waiting lists.

The reason health care is so expensive in the United States is government. Half of all medical care spending in America is government spending. After Medicaid and Medicare were created, health care costs skyrocketed, prompting the government to intervene with price controls, licensing requirements and regulations on services and medicine that further undermined a natural and healthy competition between insurers and care providers. More government won’t fix the problem.

While Americans pay less in taxes than the citizens of other rich countries—and currently pay the smallest share of their incomes for taxes since 1958—one house of Congress thinks the only thing that can be done to help the country is to cut taxes even more.

House Republicans have actually been the only ones to come up with a plan that reins in the Federal Government’s long term spending spree and it has many cuts, notably, in corporate tax rates. While Americans pay less in income tax than most other people, their corporate tax is actually the most expensive in the world.

While other countries have jumped ahead of us in green economics, we have backed away from any effort to put a price on carbon to battle climate change and promote new technologies.

The Obama Administration has actually done a lot to “battle climate change,” that is, industry. It imposed a moratorium on deepwater drilling for oil and natural gas in the Gulf of Mexico that, despite being overturned in court for being “arbitrary and capricious,” is effectively still in place as virtually no new permits are being issued.

The administration has also reversed an earlier decision to open access to coastal waters for exploration, instead placing a seven year ban on drilling in the Atlantic and Pacific coasts and eastern Gulf of Mexico. The result? Higher gas prices.

While energy prices are necessarily skyrocketing, the president has pledged investments in “green” jobs which, supposedly, is where other countries have jumped ahead.

No other country did more to boost “green economics” than Spain. The socialist government there invested massively in clean energy so they should be booming, right? Actually, researchers at Madrid’s Juan Carlos University last year found that for every renewable energy job that Spain financed, 2.2 jobs were lost. So for every four “green” jobs created, nine traditional jobs were destroyed. Today, one out of five Spanish workers is unemployed.

And while other countries invest in their basic facilities, we are letting our broadband access, roads and bridges, and rail and water systems go to seed.

Here Dionne has a point for American infrastructure is a dismal state. One of the reasons? Medicaid.

Thirty-eight states across the country have already started taking funds from their other programs, including infrastructure, to continue to pay for Medicaid, which subsidizes health care for the poor. The Democrats made the problem worse with their health reform legislation last year which prohibits states from making any changes to the Medicaid program for the next three years. By then, each state has to cover individuals up to 138 percent of the federal poverty level. Currently only Americans with incomes below the poverty line are eligible for health care benefits. So, there will be even less money to build bridges and repair railways—unless states raise taxes. But that, we are led to believe, is a good thing anyway.

If the four issues that Dionne focuses on—health care, tax reform, green energy and infrastructure—sound familiar, they should. They came right of President Barack Obama’s most recent State of the Union address, including the talk of “regaining competitiveness” and doing great things as a nation again. Dionne reminiscences about the good old days when “practical public action could make our citizens’ lives better” and, like the president, he claims that other countries are outpacing the United States.

It’s not a total fantasy. Some other countries are growing at a much faster pace than the United States is, even if Americans remain by far the wealthiest people on the planet. The reason is not, as Dionne would have it, that they successfully “married” public and private resources; the reason is that these countries opened their markets to free trade and private enterprise and let the profit motive bring up the best in people.

Just this month, the World Bank came out with a study that found no evidence to support the notion that government spending aimed at improving people’s lives had any significant effects on long term per capita income growth in more than a hundred countries during the last thirty years. Indeed, “the expansion of the state to provide for various entitlements, including so called economic, social and cultural rights, may not make people richer in the long run and may even make them poorer,” they concluded.

America is hastening its own decline with a combination of fiscal irresponsibility (a yearly $1.6 trillion deficit does eventually catch up with you, Mr Dionne) and an utterly irrational Big Government nostalgia that remembers only the New Deal and the booming Clinton years but nothing of the years of gloom and stagnation and economic revival that happened during the Reagan Presidency in between. For America to eclipse other nations once more, it has only to look at its own history and remember that other countries imitated its model of freedom to prosper—not the other way around.

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