America's Misguided Approach to Social Welfare

How the Country Could Get More for Less

A closer look at U.S. social spending shows that it is indeed distinctive, but not in the ways that many believe. The United States does tax less and spend less on social programs than most of the rich democracies with which it is usually compared. But even so, the country has developed a large and complex system of social protection, one that involves a mix of government spending, tax-based subsidies, and private social spending. In its own way, the U.S. welfare system delivers many of the same benefits as the systems in other developed countries, including health insurance, pensions, housing support, and child care. And when added together, the amount of resources the public and private sectors commit to all these forms of welfare is massive: as a percentage of GDP, for example, spending on the health and welfare of citizens is greater in the United States than in most advanced industrial economies.

Yet the American way of distributing welfare is lopsided and incomplete. Even after the Obama administration's Affordable Care Act is fully implemented in 2014, for example, the share of the population without health insurance in the United States will remain higher than in any other advanced industrial country -- even as the American public spends more on health care than publics anywhere else in the world. And the United States does not guarantee the basic rights of paid parental and sick leave -- rights assured to most other workers across the industrial world. In essence, Washington's reliance on private social benefits and services -- often provided by businesses to their employees rather than by the government to everybody -- ensures good coverage for some but poor coverage for others. Those with well-paying jobs usually get the best benefits, and those with low-paying or no jobs get worse ones. As a result, the United States' system of social protection does less to reduce poverty and inequality than that of virtually any other rich democracy.

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