The Safety Net’s Regression From Triumph to Tribulation

Earlier today I noted the forum on Progressive Perspectives on the Future of the New Deal/Great Society Entitlement Programs being cosponsored by The American Prospect and The Democratic Strategist. I want to highlight a section of the first contribution to that forum, from the Brookings Institution’s Henry Aaron, as a brilliantly succinct summary of the regression of debates over the safety net:

For U.S. progressives, the 20th century was a triumph. They fought for social insurance, and they won. They supported many income-tested benefits to ameliorate poverty, which became law.

In retrospect, one can identify at least four reasons for these successes. First, the Great Depression taught usually individualistic Americans that the harsh discipline of capitalism is acceptable only if softened with economic protections. Second, the monumental collective victory in World War II made clear to a traditionally government-phobic nation that collective action could deliver the goods. Third, starting in 1940, the United States enjoyed nearly four decades of almost continuous economic growth. Over that period, most people enjoyed improved private living standards even as they collectively helped others. Fourth, the defense budget shrank from more than 10 percent of GDP after the Korean War to less than 4 percent after the collapse of the Soviet Union. That contraction allowed domestic spending to increase without the need to raise taxes.

These conditions endured long enough to seem normal, but they were not. The deceptions and failures of the Vietnam War began to undermine trust that government is honest and effective. Watergate accelerated disillusionment. The first oil shock in 1973 caused stagflation. Stock prices remained depressed for years. For a time it seemed that the economic triumphs of the Clinton presidency might initiate a new progressive era, but Clinton’s personal indiscretions, the Nader candidacy, and a politicized Supreme Court intervened.

The first decade of the 21st century was calamitous. George W. Bush pushed for and Congress enacted imprudent tax cuts just as the baby-boom generation began to retire. These cuts recklessly squandered fiscal surpluses laboriously created during the fiscally prudent 1990s. Two wars, one rashly and dishonestly begun and both mismanaged, sharply boosted federal government spending. Most of the fruits of economic growth accrued to the rich. The middle class languished. Unemployment and under-employment soared. Budget prospects deteriorated. Debt ballooned. Suddenly, the liberal successes—Medicare, Social Security, and income-tested programs such as Medicaid and Food Stamps—seemed to many to be unaffordable.

Meanwhile principled opposition to the very concept of social insurance reemerged. When initially debated, Social Security and Medicare elicited political Jeremiads, warning that these programs would destroy personal freedom. President Obama’s health reform legislation has elicited the same absurd warnings. But even more, it seems to have aroused near-hysteria among libertarian conservatives that they are engaged in political Armageddon, a final struggle against freedom-destroying statism.

With opposition to social insurance more intense than in decades, progressives need to consider carefully what extensions of social insurance they want to seek, what redesigns of the current system they should entertain, and what cutbacks in the current system they might tolerate in exchange for high-priority gains.

That pretty much sums up the long road down to where we are today.

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Ed Kilgore

Ed Kilgore, a Monthly contributing editor, is a columnist for the Daily Intelligencer, New York magazine’s politics blog, and the managing editor for the Democratic Strategist.