August 19, 2012


The Crisis of Liberalism (Charles R. Kesler, August 7, 2012, Claremont Review of Books)

Finally, we come to the fiscal embarrassments confronting contemporary liberals. Again, Obamacare is wonderfully emblematic. President Obama's solution to the problem of two health care entitlement programs quickly going bankrupt--Medicare and Medicaid--is to add a third? Perhaps it is a stratagem. More likely it is simply the reflexive liberal solution to any social problem: spend more. From Karl Marx to John Rawls, if you'll excuse the juxtaposition, left-wing critics of capitalism have often paid it the supreme compliment of presuming it so productive an economic system that it has overcome permanently the problem of scarcity in human life. Capitalism has generated a "plenty." It has distributional problems, which produce intolerable social and economic instability; but eliminate or control those inconveniences and it could produce wealth enough not only to provide for every man's necessities but also to lift him into the realm of freedom. To some liberals, that premise implied that socioeconomic rights could be paid for without severe damage to the economy, and without oppressive taxation at least of the majority. Obama is the first liberal to suggest that even capitalism cannot pay for all the benefits promised by the American welfare state, particularly regarding health care. Granted, his solution is counterintuitive in the extreme, which makes one wonder if he is sincere. To the extent that liberalism is the welfare state, and the welfare state is entitlement spending, and entitlements are mostly spent effecting the right to health care, the insolvency of the health care entitlement programs is rightly regarded as a major part of the economic, and moral, crisis of liberalism. "Simply put," Yuval Levin writes, "we cannot afford to preserve our welfare state in anything like its present form." According to the Congressional Budget Office, by 2025 Medicare, Medicaid, Social Security, and the interest on the federal debt will consume all-all-federal revenues, leaving defense and all other expenditures to be paid for by borrowing; and the debt will be approaching twice the country's annual GDP.

If something can't go on forever, Herbert Stein noted sagely, it won't. It would be possible to increase federal revenues by raising taxes, but the kind of money that's needed could only be raised by taxing the middle class (defined, let us say, as all those families making less than $250,000 a year) very heavily. Like every Democratic candidate since Walter Mondale, who made the mistake of confessing to the American people that he was going to raise their taxes, Obama swore not to do that. Even supporters of Obamacare, like Clive Crook, a commentator for the Atlantic and the Financial Times, regretted the decision.

It is right to provide guaranteed health insurance, but wrong to claim this great prize could be had, in effect, for nothing. Broadly based tax increases and fundamental reform to health care delivery will be needed to balance the books. Denying this was a mistake. What was worse--an insult to one's intelligence, really--was to argue as Obama has...that this reform was, first and foremost, a cost-reducing initiative, and a way to drive down premiums.
If the bankruptcy of the entitlement programs were handled just the right way, with world-class cynicism and opportunism, in an emergency demanding quick, painful action lest grandma descend into an irreversible diabetic coma, then liberalism might succeed in maneuvering America into a Scandinavia-style ├╝berwelfare state, fueled by massive and regressive taxes cheerfully accepted by the citizenry. But odds are we stand, instead, at the twilight of the liberal welfare state. As it sinks, a new, more conservative system will likely rise that will feature some combination of more means-testing of benefits, a switch from defined-benefit to defined-contribution programs, greater devolution of authority to the states and localities, a new budget process that will force welfare expenditures to compete with other national priorities, and the redefinition of the welfare function away from fulfilling socioeconomic "rights" and toward charitably taking care of the truly needy as best the community can afford, when private efforts have failed or proved inadequate.

Yes, the modern conservative project is to put welfare on more stable financial footing, not to end it.
Posted by at August 19, 2012 8:26 AM

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