One of America’s chief fiscal burdens is the mounting cost of entitlements (Social Security, Medicare, and Medicaid) ”“ an obligation that will only grow larger as baby boomers age. In tackling this problem, the United States should look to what many might see as an unlikely model ”“ the European welfare state, Sweden.
“Usually, U.S. policymakers look to Europe to determine what not to do when it comes to social-welfare policy,” James C. Capretta, former associate director of the US Office of Management and Budget, wrote a few years ago.
But, he continued: “When you are in a hole, the prudent first step is to stop digging, and the United States can indeed gain insight into how to ”˜stop digging’ the entitlement hole” by studying the reforms that some European countries have implemented. Most notably, he suggested, we should study what Sweden and Germany did to cut their long-term government pension commitments.