France Outspends the Soviet Union. America Isn't Far Behind.

Chart of the Week #89

America’s national debt is coming up on $39 trillion.

That’s not a typo. $39,000,000,000,000.

The reason is simple: out-of-control government spending. Year after year, regardless of which party is in power, the federal government spends more than it takes in. Social Security, Medicare, the military, and interest payments alone consume the majority of the budget—and all of them are accelerating.

Most people assume this is just how modern economies work. Big government, big spending, big deficits. But to understand where this path leads, we need to look at a country that's much further down the road.

Take a look at today’s chart comparing government spending across countries:

As you can see, the undisputed world champion of government spending is—drumroll—France. At 57.2% of GDP, the French government now consumes more of its economy than the Soviet Union did before it fell apart.

Now, to be fair: we're not talking about Stalin's USSR where the state controlled everything. This is 1990—a system already in collapse. Decades of central planning had finally caught up with the Soviets, and Perestroika sped up the unraveling. I was born there in the 1980s, so I remember it—the chaos, the shortages, the dysfunction.

And yet France—a modern Western state with all the tools of capitalism at its disposal—now has a government consuming an even larger share of its economy than the Soviet Union did at the time.

Let’s look at the consequences.

In France today, retirees earn more than working adults. The average French pensioner takes home €1,626 per month (about US $1,900). Meanwhile, the average worker has a higher gross salary but, after deductions, ends up with roughly 2% less in take-home pay.

Read that again: the people who are retired are wealthier than the people who are working.

As if this weren’t bad enough, France also now spends about 32% of its entire GDP exclusively on social benefits. The country has one of the highest tax burdens among developed nations—44% of every euro generated goes straight to the government. On top of that, employers pay an additional 45% of gross wages in social contributions beyond salaries. Hiring someone in France costs as much as hiring 1.5 people in the United States.

The result? Youth unemployment is among the highest in the developed world. Skilled workers are fleeing to Switzerland, Britain, and the United States. Economic growth has been stagnant for two decades. All the while, France’s deficit spending continues to accelerate despite already crushing tax rates.

They say Buenos Aires is the "Paris of South America." Well, these days it's looking more like Paris is the Buenos Aires of Europe—and France as a whole may well be becoming the Argentina of Europe, a sentiment shared by many of my French friends.

Now, here’s why this should matter to Americans.

The U.S. hasn’t reached France’s levels yet. But it’s on the same trajectory.

Look at the chart again. The U.S. government now consumes 37.6% of GDP. That’s already higher than China (33%) and nearly double Vietnam (20%).

Note: And that's just federal spending—add in state and local government, and the figure climbs to around 46% (putting the U.S. on par with the EU average).

Let that sink in: America’s government is now spending more than the People’s Republic of China and communist Vietnam.

And that number is rising.

So yes, the U.S. isn’t France. Not yet. But once you’re on this path—where government grows faster than the productive economy—there is only one endpoint.

Doug Casey has been warning about this for years. Big government doesn’t just tax and spend. It suffocates capital formation, punishes success, rewards dependency, and eventually collapses under its own weight.

France is the warning. The question is whether America will heed it.

Have a good rest of the weekend!

Lau Vegys