WE ARE ALL THIRD WAY NOW:

In 2006, AEI scholar Charles Murray, a libertarian, began to call conservative orthodoxy into question. His book, In Our Hands: A Plan to Replace the Welfare State, argued that the vast superstructure of federal welfare programming was fiscally unsustainable and morally fraught. Murray proposed scrapping most of it and replacing it with a cash payment that was in essence a universal basic income (UBI). He argued that such an approach would restore agency and create a "market" within poor communities that would encourage cooperation between parents, each of whom would have a pretty good idea of the resources available to each other for the maintenance of their children. This might also create an incentive for stable partnerships as these mothers and fathers opted to conserve cash by sharing a place to live. Such domestic partnerships might, in time, bloom into marriages or something akin to them.

At the time of publication, Murray's idea was viewed as unworkable in the political context of the middle George W. Bush years because newly resurgent Democrats would never agree to the elimination of the welfare state they had so lovingly constructed over decades. Without the savings generated by ending those programs, there was no way to finance the replacement benefit. Republicans, still basking in their 1996 success, also had a lingering suspicion of policies that involved creating new cash benefits.

This suspicion of cash was "present at the creation" of the modern welfare state. Robert Caro, the great historian of Lyndon B. Johnson the man and the president, says that when Johnson's advisors proposed the War on Poverty, LBJ's one prohibition was, "No dole." Having lived through the New Deal he was acutely aware of how Republicans--not to mention his own Texas Democrats--would react to anything perceived as a giveaway to those regarded as undeserving. He refused to be blown up by a petard of his own making. [...]

Superficially, then, President Biden's American Rescue Plan (ARP) appears to be a volte-face, a return to the bad, old days of mushrooming, counter-productive federal anti-poverty programs. Mainstream media outlets describe the nearly $2 trillion plan as a major shift toward a more generous safety net, unprecedented in American history. ARP is the new face of a renewed progressivism.

In terms of gross expenditures on poverty programs, there's more than a grain of truth to this understanding. The value of the $16 billion TANF block grant, which was never indexed for inflation, has declined dramatically since 1996 and, as the chart below shows, is increasingly devoted to non-cash benefit activities related to assisting poor families (e.g., work, training, childcare, child welfare, work-related tax credits).

The new child payments will add $110 billion in federal spending by the end of 2022. Should Congress make the program permanent, it will cost close to $1.9 trillion over the next 10 years, and, according to estimates, reduce child poverty by between 30 percent and 50 percent. But, as my AEI colleague Michael Strain has noted, the ARP child payments are poorly targeted as an anti-poverty measure. Most of these resources will not go to the poor but to the middle class making them more like Social Security and Medicare than TANF, in what supporters have acknowledged is an effort to give the broader public a stake in maintaining the new program.

At the same time, the ARP payments look like another step toward seeing the federal government as an income transfer machine rather than an intrusive social engineer, not the nanny state but the auntie state. Seen that way, these payments resemble Charles Murray's 2006 vision far more than LBJ's.

To a significant degree, the ARP child payments are an outgrowth of interest in the idea of UBI programs being experimented with here and abroad. If you want people not to be poor, the argument goes, give them money. The jury is very much still out on whether these types of programs will have their intended effect without setting off a new era of work avoidance and even more, and worse, disrupted family formation.

At the same time, some recent small experiments in other federal programs are contributing to a growing body of knowledge that may confirm the libertarian insight that individuals (and families) are the most important experts in their own lives. Provided with resources and left to their own devices, with mutual support from family and friends, low-income Americans appear to do no worse, and in some cases better, than those who are enrolled in the heavy-handed and intrusive federal nanny-state programs.

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