Twelve things America likes about the Twelve

Click to follow
The Independent Online
DO NOT expect President Clinton to ask John Major's advice about ways of running a government: look instead at the extent to which US social and economic policy is following Europe. For a couple of decades the instinct of most Britons interested in policy was to look at what worked in the United States and copy it. This happened in the macro field - witness the wave of tax cutting that started in California in the Seventies - and the micro field, with ideas such as the Head Start programme for pre-school children.

Now, suddenly, the United States is copying Europe. There are at least a dozen programmes or policies either put in place towards the end of the Bush presidency, or announced in Mr Clinton's State of the Union address to Congress, where ideas developed in the EC are being brought to America. This is the most important change in the intellectual relationship between the two economic blocs to have occurred for a generation.

Start with personal taxation. The rise in the US top rate of federal income tax to 39 per cent brings it almost to the level of Britain's 40 per cent, higher if state income tax is added. True, Americans will reach 36 per cent only at dollars 180,000 ( pounds 126,000), and the top rate at dollars 250,000, whereas Britons hit 40 per cent at around pounds 27,000. For the vast majority of payers, US income taxation remains much lower than the British, but the change in direction is more important than the scale.

In energy taxation, too, the movement seems small in relation to European petrol prices. The new administration is thinking of increasing petrol prices by a few cents a gallon - the average family on dollars 40,000 a year would pay only an extra dollars 17 a month. But Mr Clinton is starting to think of energy taxation 'as the best way to provide us with new revenue to lower the deficit and invest in our people', an important change of tack.

Items three, four and five concern health care and social security. The United States spends an enormous proportion of its national income on health care, nearly double that of Britain and 30 per cent more than any other country, yet its results are rather poor. The infant mortality rate, a useful indicator of general health care, is worse than in Britain, while 20 per cent of the population has no health cover at all. Hillary Clinton has only just begun the review of the health care system, so details are not known. But the general indication is that it will probably adopt the key feature of most European systems: insurance coverage for everyone, with the state taking final responsibility for insuring people who are not covered elsewhere. Meanwhile, the President has committed himself to using the market mechanism to exert downward pressure on health care costs (as happens in Britain) rather than allowing the market to push costs up (as happens in the United States).

The rebalancing of the US welfare system will be more complex still. Mr Clinton put this in terms of abolishing the system altogether, which does not sound European at all. But this is semantics: 'welfare' in the United States has pejorative connotations. Look closer: 'We will offer people on welfare the education, training, child care and health care they need . . . then, after two years, they must get back to work - in private business if possible; in public service, if necessary.' That suggests the most extreme of the European models, that of Sweden, where the state is (or at least was until recently) the employer of last resort.

Item five seeks to help the low-waged. The United States is unusual by European standards in that many of its poor are in work but do not earn enough to keep themselves. In Europe, with its more comprehensive benefits systems, the poorest tend to be out of work. The United States intends to bring in a tax credit for the low-waged. This is a (very simplified) version of plans being discussed, for example in Britain, for merging the tax and benefit systems.

Item six corresponds to the British initiative to get more parents to pay for children's maintenance. 'We'll crack down on deadbeat parents who won't pay their child support,' Mr Clinton said.

Next, three points of industrial policy. The State of the Union address covered tax incentives for research and development, which has been standard European practice since the Fifties; apprenticeships, apparently on the German model, and reform of worker training. Item 10 concerns education. The administration, it seems, will introduce centralised monitoring of standards, an initiative that predates the Clinton presidency, but which will continue. A common curriculum for the United States? Maybe not quite.

Finally, two general policies imitate Europe: commitment to investment in infrastructure, and emphasis on regional trade with the development of the North American Free Trade Area. Both were inherited by the new administration, but both fit in with Mr Clinton's instincts.

Chauvinists would say that America is dumping part of its laissez-faire ideology and is at last willing to learn. I suspect the shift has less to do with ideology than with international competition between governments. All industrial countries have broadly the same problems; some policies help to solve them, some do not. Why not pick those that seem to work?