THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Sunday, June 30, 1996 TAG: 9606280024
SECTION: COMMENTARY PAGE: J4 EDITION: FINAL
TYPE: Editorial
LENGTH: 58 lines
Leaders of the major industrial powers at the annual G7 meeting in Lyon have discussed the state of Western economies, terrorism and other common concerns. But the real issue at the top of the agenda for most is how to shrink government without paying a painful political price.
Members of the European Union must act since continued membership depends on meeting certain benchmarks concerning government debt and the like. But citizens accustomed to government largess are unhappy at the prospect of reduced benefits.
In America, both Democrats and Republicans are now promising to shrink government and balance the budget, but their arithmetic is suspect. In Europe the problem is worse because governmental spending accounts for up to half the economy in several countries. That's far higher than in the United States where the fraction is closer to one third.
In the G7 host country of France, for example, the state provides education from day care through university at no cost. Maternity leave of six months is offered and health care is free for mother and child before and after birth.
For civil servants, as for most private employees, the work week is 39 hours and overtime of 50 percent is paid. Vacations and holidays provide seven weeks off a year. Most civil servants in France can retire at 60, many earlier, and do so at 70 to 80 percent of their final salary.
It sounds very civilized, but it's also unaffordable. Twenty-five percent of French workers are employed by the government, double the rate in the United States and Germany. Their Social Security is already running a $50 billion deficit with worse to come.
President Jacques Chirac has told his countrymen they are going to have to get used to a less-paternalistic state. The same bad news has been delivered by leaders from Scandinavia to Britain, but not in the United States.
Here, a consensus has formed that continually running deficits is unacceptable. But no agreement has been reached on which government services should be cut or which taxes raised in order to solve the problem.
Entitlements are now on the table, but only because programs like Medicare and Social Security face bankruptcy and because critics like Ross Perot and Paul Tsongas have made them an issue. But President Clinton has been guilty of demagoguery on the Medicare issue and Republicans have pretended huge cuts can be made painlessly.
Though all the industrialized countries face a similar problem, an unaffordably large public sector, each case is unique - as solutions will have to be.
American voters have a right to expect the coming presidential campaign to provide a robust debate regarding which government services are essential and how best to pay for them. Unfortunately, flinching from the truth and handing out pork has been the rule in previous races. And politicians have been encouraged in this flimflam by voters who have appeared to prefer economic fantasy to hard truths.
Our problems are not as great as some of the welfare states of Western Europe, but the crunch is coming for Social Security and Medicare as the huge baby-boomer cohort ages. Voters must demand fiscal responsibility of candidates and refuse to support those who will not address the issue. by CNB