Now declaring peace isn’t the same thing as surrendering to the status quo. As currently structured, the US safety net is financially unsustainable and retards economic growth too much, promotes dependency over work, and discourages family formation. If there are any limits on the welfare state’s expansion, the left only speaks of them sotto voce if at all. But the welfare state needs thoughtful and thorough reform. And that doesn’t mean just slapping arbitrary spending caps on federal programs and block granting them back to the states. Rather, it means restructuring programs so they are both better targeted towards those who truly need help and give a lift to those trying to get on or stay on the ladder of economic opportunity. Oh, and making programs affordable. We cannot redistribute more wealth than we create, after all.
Two examples: first, Social Security. Putting aside the New Deal program’s demographic-driven fiscal challenges, it doesn’t work so well in giving all seniors a decent standard of living. As AEI’s Andrew Biggs points out, we spend over $700 billion each year on Social Security benefits, yet 9-10% of seniors in America are living in poverty. In theory, we could give every retiree in America a poverty level benefit for half the cost of the current Social Security program. Biggs would combine such means testing — via a flat poverty-level benefit — with universal savings accounts where workers would be enrolled automatically in an employer-sponsored retirement account and contribute at least 1.5% of pay, matched dollar for dollar by their employers.