The Wall Street Journal offers some penetrating analysis on the inevitably inverse relationship between government financing of “guns” and “butter.” When tax receipts dwindle, appropriators often choose between funding social welfare programs (butter) and national defense (guns). Unsurprisingly, the European welfare state provides a cautionary example.
The overlooked culprit here is the rise of the modern welfare state. Since World War II and especially from the 1960s, Europe has built elaborate domestic income-maintenance programs, with government-run health care, pensions and jobless benefits. These are hugely expensive, requiring high taxes and government spending that is a huge proportion of GDP.
The Europeans’ obsession with income stabilization through higher taxes means there is less economic growth and less money to spend. These continental priorities mirror the massive increases in social spending enacted or proposed under President Obama – economic stimulus, health care “reform,” cap-and-trade and job creation.
As the U.S. federal deficit balloons, politicians and bureaucrats will look for ways to balance the books. And given the current Administration’s and Congress’ love affair with “butter,” unfortunately, they’ll likely look to slash spending on national defense while our nation is at war.
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