7 Way To Roll Back The Welfare State
Robert Tracinski

In my recent critique of “reform conservatives,” I challenged their assumption that it is politically impossible to take on the welfare state, which leads them to conclude that they should instead harness the welfare state for conservative ends. In response, I wrote:

The question we need to be asking is not: how can we reform the welfare state without challenging it? The question is: how can we convince the American people to start rolling back the welfare state? How can we wean the nation off entitlements? How we can do that is a big topic, and I don’t pretend to have any easy answers. But it is at least the right question to ask.

That’s a topic that is worth following up on. 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 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.

Here’s what I came up with.

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.

If we want to roll back the welfare state, we will never have any better opportunity to start than by repealing ObamaCare.

Moreover, recent elections don’t support the fear that it will be impossible to repeal ObamaCare. That wasn’t the central issue in the last presidential contest, partly because the implementation of ObamaCare was deliberately delayed until after 2012 so its unpleasant consequences wouldn’t be fresh in the voters’ minds. Meanwhile, when ObamaCare has been on the ballot, it prompted voters in Massachusetts to elect a Republican senator, and it has helped Republicans clean up in congressional and state-level races, where they have made huge gains since ObamaCare was passed in 2009.

So there will never be a better opportunity to repeal ObamaCare than if a Republican president takes office in 2017, supported (as would be likely) by a Republican Congress. The downside would be limited, with a long time to recover by moving on to other issues, while the long-term political upside is enormous.

Part of the point of repealing ObamaCare is simply to show that rollback is possible, to make it a possibility to be considered. This would help embolden the advocates of small government while demoralizing the advocates of big government.

Democrats know that they sacrificed their biggest congressional majority in a generation as the price for passing ObamaCare. But they still think they’ll benefit in the long term. They delivered an agenda item that was hugely important for their core supporters, and they created an entitlement they expect to take credit for at some time in the future when (they hope) it will become popular and even cherished. They expect that we still live under the Brezhnev Doctrine for the Welfare State: an entitlement program, once passed, will never be repealed.

If it does get repealed, that changes their calculations. Don’t expect another congressional majority to march over a cliff for a program that might not even survive. So advocates of small government might be able to stop spending their lives on the defensive, fighting off the latest DC boondoggle, and instead have the energy to go on the offensive.

Part of the point of repealing ObamaCare is simply to show that rollback is possible.

And here’s the other thing. The chronic mistake made by establishment Republicans in DC is to fixate on appeasing the wrath of the opposition’s base—and not on rallying the energy and passion of their own base by actually delivering on some big promises. There is a large and neglected constituency for smaller government, especially after six years under this administration. Repealing ObamaCare would do an enormous amount to restore the Republican Party’s credibility with this constituency. Which means that, given the general unpopularity of ObamaCare, repealing it is likely to make the GOP more friends than enemies. And it would make them the kind of friends who will support them in taking on other aspects of the welfare state.

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.

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).

Here, though, there is a lot of scope for debate within the Right. On the one hand, various tax breaks can be used in a paternalistic way to steer our money where politicians would like it to go—as with the huge child tax credits proposed by the reform conservatives. So it would probably be preferable to provide much broader tax relief with no strings attached. On the other hand, having tax breaks targeted for specific purposes helps underscore the point that these are vehicles for helping private savings supplant the welfare state. Why plan around Social Security when you have a big 401(k)? What do you need government health care for when you can have an HSA? Why look to government for grants and loans when you have a Roth IRA or a 528 college savings plan? And so on.

So there can be some lively debate within the Right on how to implement this approach. But the overarching principle is to look for ways to make it easier for individuals to provide for themselves, so that they begin to see entitlements as an impediment to their economic security—which is what they have been all along, particularly for the middle class.

Speaking of which, a great place to start is with Social Security.

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 1 and 2 percent annually, on what might have been a private investment. By contrast, long-term returns on the stock market are about 7 percent annually. And in order to make Social Security sustainable, it will have to become a much worse deal.

Look for ways to make it easier for individuals to provide for themselves, so that they begin to see entitlements as an impediment to their economic security.

That actually makes sense when you think about it. If you ever suggest eliminating or privatizing Social Security, you will hear that it has to be maintained for the sake of the poor. Why, then, is Social Security also given to plenty of people who are comfortably in the middle class or even the upper middle class? Why not reduce the benefits for those who are able to save for themselves? This can’t be portrayed as an attack on the poor, because it would specifically be targeted at those who aren’t poor.

Yet propose this simple, common-sense reform, and you will hear howls of anger and derision from the Left. They know full well, and will tell you, that the purpose of giving benefits to the middle class is not economic, but political. In order to save Social Security for the poor, they believe they have to make the middle class feel they have a personal stake in it.

Yet for all their effort, they’re failing. 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.

Almost three-quarters of the public already thinks they have no real stake in Social Security.

Can it be that difficult for our political leaders to get people to acknowledge that reality? Aren’t those people a natural constituency for a reform that would allow them to keep a little more of their own money to provide for their own retirement, rather than rely on a government promise they already know to be empty?

And if people are still concerned about whether they will be able to be self-reliant and provide for themselves, there is one other big thing we can do to help give them confidence: restore the sense of America as a land of opportunity.

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.

If we’re going to expect people to be more self-reliant, they must also have a sense of economic hope.

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.

There are a whole range of reforms we can champion to promote renewed economic growth. These include the old-fashioned tax cuts that the reform conservatives scoff at. But they also include getting rid of a whole host of intrusive regulations. On the highest level, this would include halting and rolling back the EPA’s crusade against cheap energy. We’ve seen in the past year, for example, that the only stimulus that really stimulates is cheap gasoline.

On the lower level, it could include things like crusading against unnecessary and burdensome business licensing requirements, such as the recently overturned Texas law requiring licenses for hair-braiding, which the court found failed to “advance public health, public safety, or any other legitimate government interest.” You can say that again, about a great many laws. There is no shortage of other ideas for getting the government out of the way of growth, for the simple reason that there is no shortage of intrusive government meddling.

There is no shortage of other ideas for getting the government out of the way of growth, for the simple reason that there is no shortage of government meddling.

Or we could solve the problem from the other end, targeting taxes and regulations that make everyday goods for the poor more expensive. It is the poor, for example, who struggle to keeping their gas tanks filled so they can drive to work—which is what makes our massive gas taxes, which politicians are always scheming to increase, so scandalous. So we can make economic growth go farther by imposing fewer costs on those who are trying to provide the necessities of life.

Economic growth always shrinks the welfare state by helping more people rise above poverty and above the need for government assistance. But it also creates the conditions for bigger reductions in the welfare state. Remember that what made the welfare reform of the 1990s such a big success was a booming economy with low unemployment, a growing work force, and rising wages. So when people were required to work, they found that the private economy was open to them.

That leads us to our next step.

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.

The Obama administration has used the state 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. The USDA’s goal has been specifically to “take away the stigma” of relying on handouts.

The architects and champions of the welfare state, from FDR to LBJ, swore up and down that their goal was not to create a system of permanent dependence, that they wanted to raise poor people up so they could join in the prosperity of the private economy. There are good reasons to doubt whether they really meant it, but by now the point is moot. It has long since become open government policy to move people from self-reliance to dependence.

That’s the policy that needs to be reversed. Welfare reform proved popular the first time around, and because it has largely been undermined by administrative directives and executive orders, rather than by legislation, there is a lot that a new president can do right away to re-reform welfare. Combined with strong economic growth, this should be help deflate the rolls of government dependents.

But that won’t solve all of the underlying problems. There are still many recalcitrant pockets where poverty stubbornly persists, and it’s time to start tackling the roots of that problem.

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.

We’ve gotten used to ignoring the failure of the cities and the Democrats’ tired, predictable excuses for failure.

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.

For example, there’s a big opportunity for Republicans to offer solutions that would curb law enforcement abuses without alienating the police and leading to a breakdown in law and order—because the Democrats sure don’t seem to be able to do it. Or there is a huge opportunity for Republicans to help revive the economies of big cities by cutting through high local taxes and strangling local regulations, and by fighting corruption—all of which Democrats are uninterested in doing. And there’s definitely a big opportunity for Republicans to champion reforms like school choice, which would help mitigate one of the biggest disasters in poor inner-city neighborhoods: failing public schools. And to be fair to reform conservatives, some of them do put this sort of thing in their agenda.

If we want less class and racial conflict, if we want more people moving up into the middle class, we need to start targeting the cities for basic reforms.

But all of this would require a bigger push than Republicans have tried so far. It would mean, not just showing up for meetings at black, inner-city churches—though that’s a start—but becoming serious players in debates over urban reform, and recruiting and backing serious candidates.

I know what you’re thinking. This is almost as big a problem as the one we started with, the question of how to roll back the welfare state. But saving the cities is at least a different kind of problem. It’s not just about saying “no” and trying to kill government programs. It’s about offering positive solutions for how people can raise themselves up and improve the places where they live. It’s about coming up with a solution for urban poverty that is way more effective than the welfare state has proven to be.

This is not a proposal for what Congress should do, because the solutions are local rather than federal. This is a proposal for what the Republican Party should do, what state governments should do, and where think tank elites should focus their efforts if they want to hatch plans for reform.

The local nature of these problems leads to my final suggestion for how to roll back the welfare state.

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.

The evil of Common Core is that every crackpot educational theory that finds an audience in DC ends up being imposed nationwide, and no one can escape.

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.

Federalism would also make it a lot easier to solve some of the other problems we’ve been talking about. For example, the biggest obstacle to improving the schools is the rigid regime of testing imposed under No Child Left Behind and the nationalization of curriculum under the Common Core. The evil of Common Core is that every crackpot educational theory (or plan for political indoctrination) that finds an audience in DC ends up being imposed nationwide, and no one can escape. Yet the federalization of education is a fairly recent phenomenon and one which, given the results, is an unqualified failure. Reverse it and kick the problem back down to state and local governments, which have a bigger stake in the outcome. Or better yet, give more control to parents and teachers.

The point is that federalism would break some of the big political logjams and allow states to experiment with the kind of reductions of the welfare state that may not yet be possible on the federal level.

That experimentation leads me to one final piece of advice for how to wind down the welfare state: just keep trying. I have rarely worked on a project that succeeded perfectly (or at all) on the first try. The way to find out how to roll back the welfare state is to keep trying ideas until one of them catches on. The surest way not to find that successful proposal is to give up before we even try.

The way to find out how to roll back the welfare state is to keep trying ideas until one of them catches on.

My proposals may not be the best list or the definitive list, and someone may come up with better ideas that are more popular. But at least we can begin the conversation, and that’s the most important part.

I think there is a lot more political potential for an anti-welfare-state agenda—or to put it in better terms, a pro-self-reliance agenda—than most on the right are ready to acknowledge. That’s natural enough, I suppose. Lose a couple of big presidential elections and you tend to lose confidence in your political message. But surveys of public sentiment have actually been showing decreasing support for government assistance, most strikingly among key entitlement-state constituencies such as the elderly and black voters.

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.

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Photo By: TimothyJ

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