America’s Debt Problem Is Not Caused By Social Programs

By: Ray Medeiros

April 18, 2011--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, 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.