The Welfare State Dilemma, Left and Right

Source: The Welfare State Dilemma, Left and Right
Robert W. Patterson
January 01, 2011

If the American Conservative, National Review, and the Weekly Standard would cooperate in selecting a book of the year, William Voegeli’s narrative explaining why neither rising living standards nor a conservative movement that has achieved more than a few electoral successes has been able to roll back the expansion of the welfare state, Never Enough, should be in the running. Unlike any recent assessment of American political culture, Never Enough offers a rare combination of empirical data, political philosophy, and policy analysis that not only exposes the intellectual bankruptcy of liberalism but also explains the inability of conservatives and Republicans to beat their opponents in the struggle over the federal government’s role as social engineer.

Among his achievements, Voegeli, a fellow at the Henry Salvatori Center at Claremont McKenna College, examines the economy that Ronald Reagan transformed with a new set of eyes, claiming that its asymmetrical growth pattern has made the conservative project of limiting government much harder, a conclusion that will not please economic conservatives, whether supply-siders or libertarians, who resent any questioning of their agenda. How his challenge to the conservative status quo relates to the memoir of Robert B. Carleson, Government Is the Problem, may not be clear. Yet the account of an unheralded lieutenant of Governor and President Ronald Reagan who achieved some success in decentralizing the welfare system vindicates Voegeli’s recommendation—bound to cause a ruckus during a time of Tea Party euphoria—that conservatives work with rather than dismiss as illegitimate the welfare legacy of the New Deal.

Voegeli, of course, holds off from these conclusions until the end of the book, after he puts a full set of cards on the table. That impressive hand begins with demonstrating, using historical tables of the U.S. Office of Management and Budget (OMB) to track a modified version of its “Human Resources” category of federal government outlays, that spending on public welfare programs was 15.3 times greater in 2007 than it was in 1940 after adjusting for inflation and population growth, representing a 4.14 percent real annual growth rate. Moreover, using OMB data on Gross Domestic Product (GDP), he finds that the portion of economic growth devoted to Human Resources spending grew steadily as well. So while he calculates the underlying annual growth rate of the economy at 2.44 percent in real terms, Human Resources spending—as a portion of that expanding GDP—experienced a 1.81 percent annual increase. “The pie got steadily bigger, as did the portion of the pie devoted to the welfare state,” he notes. Indeed, because of that expansion in social spending, the welfare state has become the “primary thing the federal government does,” having surpassed federal outlays on “National Defense” forty years ago, in 1971.

Documenting the same pattern in the twelve industrialized countries that participate with the United States in the Organisation for Economic Co-operation and Development, Voegeli poses the riddle that drives his research: Why has increased prosperity and higher living standards led to welfare expansion rather than welfare curtailment?

No serious consideration . . . seems to have been given to the idea that greater prosperity had significantly increased the number of households who could provide for their medical care, education, economic security and retirement largely by relying on their own resources, thereby reducing the need and justification for the government to provide for these needs by transferring wealth from some people to others.

The rest of his book explores the forces that have pressed, and continue to press, for social programs ad infinitum, as societies like the United States have grown wealthier: “The supply-side forces are the politicians, writers and activists advancing the view that social justice and decency require a bigger welfare state. The demand-side forces are the ones that move voters . . . to approve not only the steady increase in welfare state outlays . . . but the corresponding increase in taxes and regulations.”

The Inverse of Conservatives

As the data demonstrate how the liberal welfare state has grown astronomically by every measure, Voegeli uncovers another hidden reality: that liberals, who repeatedly claim that the public safety net in the United States remains ever-so stingy, are animated not by principle or ideals but by gut impulse, as captured by the book’s title, Never Enough. Here the Claremont scholar portrays liberals as the inverse of conservatives, who can’t fight enough among themselves about big ideas because they believe ideas matter. Even the American Prospect and theNew Republic concede this point—that liberals lack a coherent political philosophy. Quoting Jonathan Chait of theNew Republic, who claims that liberalism is “less of an ideology than the absence of one” and a “rejection of ideological certainty,” Voegeli believes this helps explains why the left turns policy goals into legal “rights,” as did FDR in his 1944 State of the Union address, and refuses to set boundaries around what government can do (or can do effectively), continually moving the goal posts further away so that their objectives are never fully reached. Wherever a liberal program fails, the solution is always more liberalism, not less.

Yet whatever it lacks for in political theory, the left more than compensates in policy success, again the inverse of conservatives. Voegeli suggests that liberals are remarkably shrewd, perhaps even dishonest, not only by keeping whatever big ideas they do have within the confines of the faculty lounge but also by manipulating voter perceptions by exaggerating the benefits of the welfare state and understating its costs. In a chapter worth the price of the book, “Liberalism’s Continuing Inability to Make Payroll,” Voegeli explores the “huge disparity between the welfare state liberals want to build and the tax system they are prepared to call for.” Building on Bertrand de Jouvenel’s The Ethics of Redistribution (1952), Voegeli calculates that a European-style welfare state in the United States, where no family income would fall below 200 percent of poverty levels (or about $40,000)—the goal of most liberals—would not be achieved even if all income in excess of $150,000 were taxed at 100 percent.

While no Democratic politician dares to call for such confiscatory taxes to secure this “right” to the means of a good life, liberals have continued to sell their project by “blackening the skies with criss-crossing dollars,” persuading states, counties, municipalities, and households that they can come out ahead by sending money and receiving it back from Washington, D.C. Citizens and localities may think they are a net importer of resources, yet “the total amount imported by the states, cities, etc. will always be less than the total amount exported” because the middle man—the federal government—demands his cut. Consequently, the liberal project requires obfuscation at every level:

Simplicity promotes clarity, while complexity promotes confusion. Liberals could have chosen otherwise, but have consistently acted like people who believe that clarity is the enemy and confusion the friend of the welfare state. The goal, accordingly, is to make the welfare state as complex as possible. A complex welfare state will have many ambitions, many initiatives to advance them, and will not be fastidious about programs overlapping or duplicating one other. This proliferation increases the number of voters who identify themselves as the beneficiaries of at least one government program. The tax and regulatory systems, meanwhile, should also be as baroque as possible. Such complexity increases the number of voters who can guess at what they pay for the welfare state, and increases the likelihood that their guesses will fall well below the actual amount.

Why conservatives have been unable to outfox the liberals at their game remains the enduring question. The Claremont fellow does concede that, since the 1980 election of Ronald Reagan, the pattern of an expanding welfare state has slowed considerably, as the portion of GDP devoted to Human Resources spending has remained largely flat, meaning that welfare spending has only increased in lock step with, not at a faster pace than, economic growth. Nonetheless, as measured by per-capita, inflation-adjusted federal outlays, spending on Human Resources increased at an annual rate of 0.90 percent under Reagan; 5.23 under Bush 41; 1.49 under Clinton, and 3.03 under Bush 43. Among the reasons why conservatives have only “postponed” the advance of liberalism or settled for its slower growth is that they, like eager salesmen, have oversold the benefits of tax cuts and economic growth.

Voegeli bases his assessment on Congressional Budget Office income data that make clear that the much-touted supply-side revolution led by the Reagan, Clinton, and Bush 43 tax cuts delivered dramatically more for the upper-middle class than for the working-middle class, doing little to help conservatives expand their electoral market share. “These tax cuts,” claim Voegeli, “were hardly of a sort to significantly improve the lives—or earn conservatives the political loyalty—of the households making up [the bottom] three-fifths of the income distribution.” Noting that after-tax income of the middle quintile household increased just 21 percent in real terms between 1979 and 2005, Voegeli observes: “It’s doubtful that a political coalition for limited government can be purchased so cheaply.”

The Missing Piece

Voegeli deserves praise for taking on a sacred cow of conservatives, but his argument would be stronger had he included in his calculus the social and demographic changes since the 1970—especially the retreat from marriage and the breakdown of family life, that drive welfare, social, and health-care spending—a dynamic at work in Western Europe as well as this side of the Atlantic. More than any other variable, the decline of the social sector that is independent of both state and market deserves far more consideration as the answer that solves the riddle of a society growing ever more prosperous yet in need of ever-more federal guarantees of well-being, “fairness,” and income security. It may also explain why the lower 60 percent of the income distribution, where family breakdown is more prevalent (and more consequential economically) than it is in the higher-income groups that have done extremely well since the Reagan era, have been less receptive to a conservative agenda that largely ignores these changed social realities.

This is not the only oversight of Never Enough. Like most conservatives, Voegeli lumps together the New Deal and the Great Society as two pieces of the same welfare pod, overlooking the substantive differences between the two that conservatives could exploit for their own advantage. Compared to the social engineering that LBJ initiated, the measures of the New Deal represent a conservative approach to welfare. The benefit structure of Social Security, for example, reinforces and upholds the married-parent family as the basic social and economic unit. To this day, as Lawrence Mead has pointed out, these programs retain the concept of reciprocity: beneficiaries receive no assistance unless they have paid into the system, while their benefits are determined in part by their “contributions” and by number of dependents. The entitlements of the Great Society are just the opposite. Except for Medicare, which was built off the New Deal model, the initiatives launched by LBJ are “means-tested” and contain no element of reciprocity; furthermore, their perverse benefit structures have rewarded illegitimacy and worked to displace marriage and fathers from low-income families, paving the way for the social meltdown since 1970. One might say the Great Society turned wine into water by undoing the pro-family achievements of the New Deal that helped America become the envy of the world at mid-century.

The recognition of these stark differences might help Voegeli in his attempt to persuade conservatives to rethink their ideological and constitutional objections to the welfare state. What he terms “a quixotic, self-marginalizing gesture”—especially extended by libertarians and Tea Party true believers—of imagining that the United States can return to a pre-New Deal era has painted conservatives into a corner, he laments, limiting their ability to formulate meaningful reforms of the sort that the late Irving Kristol envisioned, proposals that would be taken seriously among lawmakers and which would make the welfare state less problematic and more effective. “There can be no conservative welfare state if conservatives insist there can be no constitutional welfare state,” Voegeli warns, claiming that conservatives would find greater success in holding their constitutional powder for assaulting the regulatory state, not the welfare state. Those meaningful welfare reforms may center less around the means testing that Voegeli believes offers promise and more around making Great Society programs, especially Medicaid, look more like New Deal programs by infusing them with reciprocity and marriage incentives, as well as indexing Social Security and Medicare taxes by marital status and family size, much like the treatment of income taxes.

The Carleson Contribution

Other reforms, especially of means-tested welfare, could take their inspiration from the late Robert Carleson, whose Government Is The Problem reveals the insights of a conservative practitioner of welfare policy who designed and implemented reforms. Carleson warrants attention because he was first to deliver measurable results as the architect of Ronald Reagan’s welfare reforms in California, the precursor to reforms in Michigan, Wisconsin, and Utah as well as the replacement of Aid to Families with Dependent Children (AFDC) with Temporary Assistance for Needy Families (TANF) in 1996. Moreover, he reminds those who seek a more efficient and effective welfare system of the vested interests, entrenched at both state and federal levels, that seek to preserve the status quo. His book offers a taste of the fierce resistance, even from Republicans, that Carleson experienced as director of the California department of social welfare, U.S. Commissioner of Welfare, member of Reagan’s White House staff, and player in the 1996 legislation.

These in-the-trench experiences only confirmed Carleson’s hearty endorsement of Governor Reagan’s quip that welfare reform is too important to be left to the social workers. So when the governor appointed a welfare taskforce that resulted in the Welfare Reform Act of 1971, he made sure that the welfare-social services complex had no seat at the table. In Reagan and Carleson’s view, that establishment was the problem; it expanded the caseload by broadening eligibility for benefits to include the non-needy, feeding the explosion of welfare spending that threatened the solvency of the state. But by reforming the system from the outside, Carleson’s plan achieved the first reduction in state welfare rolls in a generation (by 300,000 recipients), saved California from bankruptcy, and yielded a real increase in benefits to the truly needed.

Government Is the Problem also reveals Carleson’s preference for what he calls a Jeffersonian over a Hamiltonian approach to government, or for the welfare system that the United States enjoyed before the advent of the Great Society, when the federal role was modest and states and localities were the main players. Because Social Security is marginal to his discussion, Carleson can honestly claim that the United States did not really have a welfare state in the immediate postwar era. Nonetheless, to the degree that the United States did have a welfare system, decentralization gave states greater discretion in running federal programs like AFDC, an arrangement that checked means-tested welfare spending, which did not become a growth industry until the mid-1960s.

Carleson therefore stresses the importance of reversing the “federalization” of welfare that the Great Society accomplished both legislatively and judicially and returning control to the states to allow what he was able to accomplish in his native California. Seeing the states as “laboratories of democracy,” he makes a strong case against all Washington directives, from guaranteed income schemes like the Nixon’s Family Assistance Plan to the greater federal controls called for by Heritage Foundation analyst Robert Rector when TANF was set up in 1996. He likewise calls for consolidating a host of programs through finite block grants to the states, like TANF but with no strings attached, rather than open-ended entitlements, like Medicaid and the old AFDC, to allow states maximum flexibility in fashioning programs to serve the truly needy.

Carleson’s insights are all well and good; yet reading his short memoir in a time of fiscal, economic, and social crisis bears witness to the inconvenient truth that while conservatives may have won a few welfare battles, they are not winning the war. Liberalism continues to advance as if the reforms of 1971 or 1996 hadn’t happened. Even if discretionary federal spending were trimmed back to 2008 levels, a target of the GOP, the welfare state would remain largely intact. That’s why Voegeli’s case for a “conservative welfare state,” especially if qualified by socially conservative ideals that graced the New Deal, needs to be taken more seriously by Republicans and conservatives than did Irving Kristol’s similar plea nearly twenty years ago.

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