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Opinion

To cut entitlements, US can look to one of Europe's welfare states

The mounting cost of entitlements will only grow larger as baby boomers age. Four senators have proposed bipartisan legislation to fix one part of the mess, but more is needed. Congress should look to an unlikely model – Sweden's bipartisan pension reform of the 90s.

By Harold L. SirkinOp-ed contributor / July 24, 2013

Progressive Change Campaign Committee members upset over potential entitlement cuts walk to President Obama's campaign headquarters in Chicago, July 15, 2011. Op-ed contributor Harold L. Sirkin writes: 'Too often in [the US], ideologues on one side or the other approach [entitlement] reform as an “all or nothing” fight to the death. Sweden didn’t go there" in its pension reform in the 90s.

David Banks/AP/File

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Chicago

In a rare act of bipartisanship, four members of the US Senate have introduced legislation that would fix one small part of the entitlement mess plaguing the country.

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Democrat Joe Manchin of West Virginia, Independent Angus King of Maine, and Republicans Tom Coburn and Jeff Flake, from Oklahoma and Arizona respectively, have put together a plan that would make sure individuals collecting Social Security disability benefits aren’t also collecting unemployment insurance, which is intended only for those able to work and actively seeking work.

While the proposal is not a cure-all by any means, it shows that common sense bipartisanship is possible, even in today’s poisoned political climate. America needs more such initiatives, even modest ones.

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.

Twenty years ago, Sweden’s economy was on course for a financial train wreck. Sweden acknowledged the source of the problem – an aging population, a shrinking workforce, longer life spans, and a generous pension system that virtually everyone recognized as unsustainable. Then it did the unthinkable: Right and left made common cause to fix the problem.

The first part of Sweden’s story should sound familiar to Americans: The US today is on a similar trajectory. The second part will sound alien: politicians from both sides of the aisle working together to tackle a serious problem.

What did Sweden’s leaders do?

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