The End of the Welfare State

Back in 1996, just before President Bill Clinton signed a welfare reform bill, he declared: “The era of big government is over.”

The other shoe dropped a couple of weeks ago when another chastened Democratic president, Barack Obama, signed a terrible deal to raise the debt ceiling. It will cut government spending by more than $2 trillion without including any of the revenue increases the president had demanded.

FDR. Source: Library of Congress

The deal has caused an outcry from the president’s liberal base, because they know what’s really at stake: the survival of the welfare state that emerged from the New Deal and the Great Society.

How can I say that?  Isn’t federal spending expected to rise by trillions of dollars over the next decade to pay for the growing costs of these very programs? And didn’t the Bush and Obama administrations just extend Medicare to cover prescription drugs and add health care coverage to millions more?

That’s just the point: It’s starting to sink in that we can’t afford even the existing programs.  The total future unfunded obligations of Medicare, Medicaid, Social Security, and other promised federal benefits approach $50 trillion. As baby boomers retire and live decades more, we won’t be able to pay for anything else, and our kids and grandchildren will be stuck with the bill.

Right now the overwhelming majority of Americans support these programs, as do I, and I oppose the kind of radical overhauls proposed by, say, Rep. Paul Ryan (R-Wisc.)

But clearly something has to give. Either contributions need to rise or benefits have to fall (based on income) or both. Maybe doctors and hospitals won’t get paid as much for their services. Maybe 85 year olds with cancer shouldn’t expect taxpayers to pay for hip replacements or new drugs that cost $100,000 a year and extend their lives for six months.

Protesters battle police in Athens over austerity plans. Photo Credit: Flickr Creative Commons, mkhalili

The debt ceiling mess was the beginning of a long, monumental debate we need to have in this country about what size government we want and can afford. Slowly, painfully we will come to a consensus on that. The process may get even uglier in Europe, which has an older, shrinking population and much more generous welfare states.

The president and Congressional Democrats have vowed to defend the core programs of Social Security, Medicare, and Medicaid. But from now on, don’t look for any big, long-term expansions of government. The battle now will be over how much and how quickly the welfare state will shrink, not grow.

, , , , , , , , , , , , , , , , ,

7 Responses to The End of the Welfare State

  1. Judy Halgren August 12, 2011 at 5:20 pm #

    The tea party is pulling the country down. It would be nice if we had a real third party that cared about the people. While our economy is collapsing we haven't lost our spirit and we can rise again as a strong nation with better leadership and a new system.


  2. Richard August 12, 2011 at 9:20 pm #

    There are too many old immegrants come to the US, who have not worked a single day here but enjoy all full benefits that even more than those who work here with low incomes but paid taxes for many years. All those benefits should be stopped or at least lowered to no more than the level that qualifying for the benefit.

    Another thing is that in recent years so many foreign pregnant women come to US to give a birth, then they get all the benefits for hospital services, baby cares and food. Why should we pay for them? We have too much money to spend? it's ridiculous!

  3. Ron August 13, 2011 at 8:46 pm #

    We have $50 Trillion in unfunded liability – that pretty much says it all. It would probably be $30 Trillion without the Bush Tax Cuts. It is obvious that entitlement programs need to be sheared down some. It might be better to pay more in taxes than to see negative stock market returns over the coming decade. I do believe in a balanced budget and think it can be done within ten years. Off course, if you take everything off the table then there is no shot of this happening.

  4. EarlGrayHot September 9, 2011 at 4:42 pm #

    THe extremists in the Tea Party have already ruined the Republicans. They, after all, were all too willing to jump in bed with the Tea Party morons as long as it got them electet. Ignore anyone who yammers on about TP talking points and let’s get back to real centrism and a willingness to compromise.

  5. Rick Otton January 17, 2012 at 11:53 am #

    I have read a few good stuff here. Certainly value bookmarking for revisiting. I surprise how so much effort you set to create this sort of excellent informative website.

  6. Jim Thomas June 11, 2012 at 7:43 am #

    I agree that there is a terrible problem with deficits in this country, but I think we have it backwards.

    The real problem isn’t the unfunded liabilities everyone talks about, it’s the deficit RIGHT NOW! We can’t conjure up $50 trillion out of thin air, but we can get the current deficit under control in one or two years if we’ll just do the right thing.

    It is doable to cut the defense budget by $150 billion if we pull out the troops, it’s doable that we raise taxes by $200 billion just with marginal increases on the rich and upper middle class (that won’t hurt their way of life at all) and it’s doable we squeeze another $150 billion out of the whole thing with better efficiency and no pay raises.

    Combine that with another $200 billion in rising revenue from a growing economy and we’re on our way. The real tragedy is that we’re not doing any of those things while we pretend to be responsible by talking about Medicare 30 years from now.

    • HowardRGold June 11, 2012 at 2:42 pm #

      Good comment, Jim! Thanks a lot.

      If we do what you recommend–or some variation thereof–we\’d get out deficit under 5% of GDP and might have our AAA rating restored. It would also be a shot in the arm for the economy as the fiscal responsiblity of the Clinton years showed.

Leave a Reply