What Now For Big Government Liberalism?

In Budget Politics, Democratic Governance, Economic Planning, Economics, Full Employment, History and Politics, Inequality, Liberalism, Living Wage, New Deal, Political Ideology, Political Parties, Politics, Politics of Policy, Poverty, Progressivism, Public Policy, Social Democracy, Social Policy, Social Security, Welfare State on April 8, 2010 at 4:07 pm

Introduction:

Recently, I’ve discussed what comes next for health care policy after the passage of the Affordable Choices Act – but there’s also been a healthy amount of debate about what the impact of health care reform will be on other legislation – such as financial regulatory reform. However, Matt Yglesias has also added to the debate by expanding our field of inquiry to the welfare state itself; in his theory, the establishment of health care reform marks an end to major expansion of the welfare state.  Future debates will be about “how to boost growth, how to deliver public services effectively, and about the appropriate balance of social investment between children and the elderly.”

As someone who has written about this topic previously, I have to say that I really disagree (and I’m not the only one). Health care reform does not mark the limits of the welfare state, and there are many basic areas of social welfare where the U.S is deficient or completely lacking. The future of “big government liberalism” is one of new areas of expansion, not a shift to a politics of means and priorities.

Which New Direction for Progressivism?

As I’ve argued in the past, one of the great barriers to passing progressive legislation is the fear of the unknown, the untried, and the new – and specifically that passing some big piece of legislation that will inevitably become controversial might damage the re-election chances of sitting Congressfolk and Senators. While we’d all like to believe that our legislators are fearless innovators ready to spring into action when the public interest is at stake, the fact is that legislatures tend to stick close to the status quo, and tend to be reactive institutions. This is somewhat distressing to progressives, who want to move beyond the status quo, but there is a flip side: when legislatures actually pass reforms, they tend to pick up momentum. Policy historians and political scientists of the “American Political Development” school refer to this process as “policy feedback” – institutional decisions taken at earlier points in time entrench themselves in the political system and accumulate political power and resources, while discouraging alternatives. Part of this process has to do with the creation of new institutions and incentives, but I would argue that it also has to do with the habits and routines of legislators. As a certain policy becomes accepted as a part of the normal order of things, passing additions and amendments to that policy lose their appearance of risk and become voter-winners; the expansion of Social Security after 1935 is a classic case, where regular expansions of eligibility and increases in pension levels became a staple of pre-election Congresses.

Health care will in all likelihood follow the process of path dependence – as I discussed in “Health Care Reform is Done – Time for Health Care Reform,” there will be regular amendments to increase subsidy levels, expand Medicaid, and the like. But it’s also the case that passing health care reform is likely to make it easier to expand other areas of the welfare state. The passage of Social Security opened up an entirely new relationship between citizens and the state, without which the passage of Medicare and Medicaid would have been both politically impossible and Constitutionally doubtful. In our time, when people become accustomed to health care exchanges, a larger Medicaid, and premium subsidies, it will make right-wing fear-mongering about other social welfare programs less credible.

It should be understood that the expansion of the welfare state is not an “expansion of choice” or a crude vote-buying exercise – it is a moral mission, launched in the Progressive Era and handed to the modern Democratic Party by FDR when he set forth in his second inaugural that “the test of our progress is not whether we add more to the abundance of those who have much; it is whether we provide enough for those who have too little” and proposed a Second Bill of Rights, backed up by the Wagner-Murray-Dingell Bill and the Full Employment Bill, to meet the challenge in his time.

In our time, far too many of the basic provisions of the Second Bill of Rights remain unmet. Therefore, the next step for “big government liberalism” begins with the unfinished business of the Second Bill of Rights:

  1. Rebuilding the Welfare State – the cornerstone of the American welfare state is our Social Security system, which includes not just the old-age provisions, but also Unemployment Insurance, Disability Insurance, and the like. A major source of our continual problems with unemployment, poverty, and economic insecurity lie with the fact that the existing welfare state has been largely neglected, such that large sections of the population lack basic coverage and benefits are far below where they need to be to provide genuine protection against poverty. This is not a matter of mere implementation – substantial new expenditures will be required to make a welfare state that’s up to the task of protecting all Americans from the “vicissitudes of modern life.”
  2. Creating a Unified Child Policy – one major hole in American social policy is child policy – and has been for a long time. While AFDC was hardly the ideal program, the results of welfare “reform” enacted in the 90s is that our child care policy is largely fragmented between dozens of programs, it’s means-tested and thus excludes large numbers of children in poor, near-poor and working class families, and it’s badly under-funded, so that a minority of the child population actually receives benefits. The result is one of the worst social policy records in the developed world: 21% of American children live in families below the poverty line; another 22% of children live in “near poor” families within 100-200% of the poverty line, where a sudden illness or job loss or other crisis can easily send the family into the ranks of the destitute. The United States has the worst record on infant, neonatal, and child mortality rates of any industrialized country – our under-5 mortality rate is 33% higher than the rate of other industrialized nations.
    1. Creating a unified child policy program will require substantial resources. We need to move towards a universal non-contributory system of health care for children and expectant mothers that’s free at the point of purchase, we need a system of family allowances that’s sufficient to lift families with children out of poverty, we need to provide universal child-care and pre-K through an expansion of Head Start – all of these policies are essential, and they will provide returns on our investment far beyond the initial costs, but they’re not going to be cheap.
  3. Establishing a Jobs State – I’ll be brief about this, because I’ve covered the issue of job insurance, labor market policies, and industrial policy elsewhere. The basic point is this: American economic security is entirely dependent on employment; in addition to the wages and benefits we get while we’re employed, virtually all of the social insurance protections that exist (Old Age Insurance, Disability Insurance, Worker’s Compensation, Unemployment Insurance, Medicare, etc.) are tied directly to your payroll contributions as a worker. And yet, as is becoming increasingly clear, our economy is producing fewer and fewer jobs, even fewer living wage jobs, and is becoming increasingly slow to add jobs in economic recoveries, as employers turn to productivity measures, a casualized labor force, and outsourcing to avoid labor costs. In order to restore the balance of our economy, and to ensure that our social insurance system is being supported by as many workers as possible and that as few workers as possible need assistance, the government is going to have to be a more active participant in the American labor market. While there are ways of financing such a system that are well within the fiscal capacity of the state, it also requires substantial new investments.
  4. Abolition of Poverty and Reduction of Inequality – while measures to improve the welfare state, fight child poverty, and reduce unemployment will have a substantial impact on poverty rates and will reduce inequality by redistributing resources to the lesser-off, there will still be a need for additional measures to reduce poverty and reduce inequality – the good news is that combining these efforts will make the combined impact on poverty even more impressive, reducing the poverty rate well below 5.7% and returning our distribution of wealth to the more egalitarian levels of the 1970s if not better. Again, this will take additional resources and involve entirely new areas of policy.

Conclusion:

In the end, the question is one of vision: is the America we want to live in, the America we want future generations to live in, the U.S as it is now, plus health care? I don’t think it is, and doing the work mentioned above to make the U.S a nation where economic security and social justice really are universal will take at least another generation at the most optimistic.

The day when progressives can shift their attention to a politics of efficiency of delivery or balance between objectives or the need to regulate against bad actors may yet come – but it’s not here today, and it won’t be for a long time.

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