October 31, 2013

THE SECOND WAY OR THE THIRD?:

Time for the American right to declare peace on the US welfare state (James Pethokoukis | October 31, 2013, AEI Ideas)

The federal government's income definition misses a lot of stuff such as food stamps, subsidized school lunches, Medicare, Medicaid, and Earned Income Tax Credit benefits. Add in all that, factor for taxes, and you'll find, as e21 economist Scott Winship has, middle-income buying power is essentially back at its 2007 peak -- which was an all-time high. "In short, while the middle class--and especially the poor--saw declines in market income after 2007, the safety net appears to have performed just as we would hope, mitigating the losses experienced by households," Winship concludes.

And while the recovery's glacial pace, both in terms of GDP and jobs, is unacceptable, the safety net's performance is encouraging. The pain from the Great Recession, as bad it was, would have been far worse for middle- and low-income Americans if we were still in a sort of 1920s, Coolidgean world that many on the right these days seem to long for. As Arthur Brooks, AEI's president, puts it:

One of the things, in my view, that we get wrong in the free enterprise movement is this war against the social safety net, which is just insane. The government social safety net for the truly indigent is one of the greatest achievements of our society. And we somehow want to zero out food stamps or something, it's nuts to want to be doing something like that. We have to declare peace on the safety net.

Now declaring peace isn't the same thing as surrendering to the status quo. As currently structured, the US safety net is financially unsustainable and retards economic growth too much, promotes dependency over work, and discourages family formation. If there are any limits on the welfare state's expansion, the left only speaks of them sotto voce if at all. But the welfare state needs thoughtful and thorough reform. And that doesn't mean just slapping arbitrary spending caps on federal programs and block granting them back to the states. Rather, it means restructuring programs so they are both better targeted towards those who truly need help and give a lift to those trying to get on or stay on the ladder of economic opportunity. Oh, and making programs affordable. 

Posted by at October 31, 2013 7:42 PM
  

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