Rolling Back the Entitlement State

Robert Tracinski at The Federalist believes that reform of the welfare state is both necessary and possible but that it has to be replaced with something. We can't just eliminate things like the Affordable Care Act without giving people other options. Tracinski's essay outlines seven things a Republican administration and Congress can do to eliminate the welfare state and improve considerably the lives of all Americans. I list the seven here with a couple of sentences of explanation, but you'll have to go to the article to read his full defense of each.

What agenda for the right would really count as fundamental reform? What would help conserve the Constitution instead of conserving the welfare state?

I will take for granted all the reasons why we should fight the welfare state: its vast and unsustainable costs, its encouragement of dependency (and not just for the poor but for the middle class, which is less excusable), and particularly in the case of Social Security, its catastrophic diversion of money from private savings to government consumption.

Instead, I want to put forward some ideas on the how: specific political reforms that might actually be politically possible, and which would prepare the ground and build public support for a real scaling back of the welfare state.

1) Repeal ObamaCare
If we want to roll back the welfare state, we will never have any better opportunity to start than by repealing ObamaCare—a program that is relatively new, has never been popular, and is in a slow process of imploding. The latest reports: state insurance exchanges set up to implement ObamaCare are foundering, and insurers in these exchanges are filing requests for enormous increases in premiums. Why? Because “with a full year of claims data under their belt for the first time since Obamacare went into effect, they’re finding the insurance pool was considerably older and sicker than expected”—expected, that is, by everyone except ObamaCare’s critics. Meanwhile, ObamaCare has pushed a lot of people into high-deductible insurance plans that have made it harder for them to pay for health care.

But the point made by the reform conservatives is that we can’t just define our agenda in terms of what we’re against. We have to have a positive agenda, our own solution to the voters’ problems and concerns. Fair enough. A true reform agenda shouldn’t just be about knocking down failed entitlement programs. It should be about building up the alternatives to a massive federal welfare state. Hence the natural follow-up to a repeal of ObamaCare.

2) Health Savings Accounts
Scrapping ObamaCare would be a natural opportunity for Republicans to propose their own free-market health-care reforms. The centerpiece of that alternative should be Health Savings Accounts, which make it easier for individuals to save money in tax-free accounts which they can use for medical expenses. They were popular and worked well (I used to have one) before ObamaCare put the squeeze on them, because God knows we wouldn’t want people thinking that it’s possible to just pay for their own health care expenses.

Or maybe we would. That’s precisely the model for how to get from here to there: to make it easier for people to accumulate private savings for the things they’ve been encouraged to rely on government to provide. We can do similar things for other goods like education and retirement savings, where IRAs and 401(k)s perform that function (and are, naturally, under attack from the left).

3) Means-test Social Security
Social Security is already a bad deal for the middle class, since the benefits are already skewed in such a way that they are equivalent to a tiny return, between one and two percent annually, on what might have been a private investment. By contrast, long-term returns on the stock market are about seven percent annually. And in order to make Social Security sustainable, it will have to become a much worse deal.

A recent survey found that “41 percent of Americans think there will be no Social Security benefits for them when they retire and nearly a third expect reduced levels of benefits.” In other words, almost three quarters of the public already thinks they have no real stake in Social Security. They think they’re going to get milked their whole lives to pay for it and get little or nothing in return.

4) Restart economic growth
Since the financial crisis, the United States has slipped into the Obama rate of growth, a permanent state of semi-stagnation. We’ve been through market crashes and recessions before, but usually after a year or two of pain, we get a strong burst of growth to make up for it. This time, we’re in the long twilight of a non-recovery recovery. The economy is technically growing again, but at such a feeble rate that it hardly feels like it. It’s the kind of economy in which the unemployment rate falls, not because the long-unemployed are all getting jobs again, but because so many people are dropping out of the workforce altogether.

This low rate of growth makes the burden of the welfare state greater, because we can no longer grow our way out from under its expenses. At the same time, it makes the welfare state harder to get rid of. You can’t just tell the unemployed to go out and get a job when the economy is still flopping around and gasping like a fish in the bottom of a bass boat. If we’re going to expect people to be more self-reliant, they must also have a sense of economic hope.

5) Re-reform welfare
Never letting an opportunity go to waste, the Obama administration has used the recession to gut the welfare reform of the 1990s, extending unemployment benefits and loosening work requirements.

More broadly, it has rejected the whole spirit of welfare reform, which was to devise ways to move people away from dependence on government and toward work and opportunity and self-reliance. Instead, the administration has used the state for the opposite purpose: to push people from self-reliance into dependence.

Consider the food stamp program, which was rather unconvincingly renamed SNAP in an attempt to escape its well-earned stigma. (Eventually, they’ll need a euphemism for the euphemism, and they’ll have to change the name again.) The USDA has been spending millions of dollars advertising food stamps in an attempt to increase the program’s enrollment. Advertising for welfare. That says it all, doesn’t it? And it has worked. The Daily Caller notes that “In the 1970s, one out of every 50 Americans was on food stamps. Today one out of every seven receive the benefit.” The program has doubled under Obama’s watch.

6) Save the cities
This year’s riots in Baltimore reminded us of a central irony of American politics: the centers of economic inequality and racial conflict—the key issues on which Democrats always campaign—are places that are the sole property of Democrats, owned and run by them for about as long as anyone can remember.

On the right, we’ve gotten used to ignoring the failure of the cities and the Democrats’ tired, predictable excuses for failure. (It’s all the fault of slavery!) That’s because we’ve gotten used to writing off the cities as Democratic Party territory, so their failure is not our business. Long since, the respectable middle class (both white and black) voted with their feet, decamping to leafy suburbs with safe streets, affordable real estate, and halfway decent schools. We left, in part, so we wouldn’t have to worry about the perpetual dysfunction of the cities any more.

But the riots in Baltimore are a reminder that this is our business, after all. We have an interest in arresting the failure of the cities because they are the big remaining engine of social strife in America, the festering centers of class warfare and racial conflict. To the extent that there are still large numbers of people in this country who live in hopeless poverty and grow to resent the giant gap they can see between themselves and wealthier people who live in the next neighborhood over—they are mostly in the cities. To the extent there are people whose daily life reinforces the notion that America is systematically racist and the police are the enemy, they are mostly in the cities.

If we want less class and racial conflict, if we want more people moving up into the middle class and no longer feeling the need for government support, if we want to compete for the vote in what are now deep centers of political support for the left—then we need to start targeting the cities for basic reforms that will improve the quality of life there and bring back the middle class.

7) Federalism
Part of the reason we have such a bloated welfare state is because every decision in Congress has to be a compromise between “blue state” politicians who want more and more and more government and “red state” politicians who usually claim they want less. Hence my modest proposal that we kick these decisions back down to the state level, which is where they were always intended to be. This is not a foolproof solution, because we’ll still occasionally get local handouts like ObamaCow. But the general idea is that we can let New York and California set up more generous welfare states—if they want to pay for them. And they should let the hinterland scale back welfare. Then the states can compete to see whose approach is more successful and how many people vote with their feet for the small government model. Even now, the results on this are encouraging, with low-tax, low-regulation states experiencing huge increases in population.

Tracinski concludes with this: "The audience is there for a real reform agenda. We just have to find the right people and the right message to connect to it."