America goes to the polls on November 6 under a dark, threatening cloud: the gargantuan $16 trillion national debt — and its inevitable expansion, at least in the short term, whoever wins the White House. Not only in the US but in welfare states around the world this issue has become critical as waves of baby boomers turn 65 and start collecting their retirement benefits. Suddenly, the younger generations, whose numbers have been thinned by “choice”, become extremely necessary as earners and taxpayers. As for those workers yet to be born, they already have their future mapped out as debtors to the lifestyle of their parents and grandparents.
Pensions and prescriptions, however, are not the only benefits driving welfare states deeply into the red. Means-tested benefits, including free or subsidised healthcare, to relieve poverty are also causing budget blowouts. In a new book on the growth of government-funded entitlements in the US, political economist Nicholas Eberstadt points out that in 2010, no less than one-third of households received anti-poverty transfers while the poverty rate was less than half that (15.1 percent of the population) — and these households accounted for nearly half of all America’s children. Today, astonishingly for a wealthy country, half of all American families receive some kind of government benefit.
In fact, says Eberstadt, over the past 50 years, entitlement payments have “turned American governance upside down,” growing through good times and bad — and under Republican administrations as well as Democratic — from well under a third of the federal government’s outlays to two-thirds by 2010. Today, all the other responsibilities of government make up barely one-third of federal spending.
Eberstadt, who holds the Henry Wendt Chair in Political Economy at the American Enterprise Institute, sees this expansion of the welfare state as a malign development, eroding not only the US economy but, more seriously, the American character and the nation’s tradition of independence. The title of his book says it all: A Nation of Takers: America’s Entitlement Epidemic. Driving the detailed statistical case he presents is a passionate argument that his country is squandering its moral as well as material capital. It stubbornly refuses to address its appetite for handouts and its habit of dependency — even to the point of mortgaging the next generation.
He points to five symptoms of this moral effect:
The flight from work by men. Between 1948 and 2011 the proportion of adult men who did not consider themselves part of the workforce steadily rose, from under 13 percent then to almost 27 percent now. By 2003—well before the Great Recession—7.2 percent of American men of prime working age were outside the workforce (as against just 3 percent in Greece!). Social trends relating to women, recessions and ageing all play a part in this, but there is also a factor of “not wanting to work” made possible by entitlements.
Gaming the system. “Exhibit A is the explosion of disability claims and awards under the disability insurance provisions of the U.S. Social Security program,” aided and abetted by health professionals. “In 1960 an average of 455,000 erstwhile workers were receiving monthly federal payments for disability. By 2010 that total had skyrocketed to 8.2 million (and by 2011 had risen still further, to almost 8.6 million)” — an eighteen-fold increase during a time of tremendous improvements in public health.
Myth of pay-as-you-go entitlements: in reality increasingly financed by the unborn. “Social Security and Medicare both are intergenerational resource transfer plans, whereby today’s takers, with very few exceptions, consume at the expense of those born after them. … That fateful line was crossed by the U.S. welfare state long ago: there has never been any great interest in protecting of the rights of the unborn on the part of U.S. social insurance programs and their presumptive beneficiaries.”
Crowding out defence. Although national security is a Constitutional responsibility of government “U.S. government outlays on entitlements do not merely exceed those for defense nowadays, they completely overshadow defense outlays.” The true problem with “affordability” lies with overall spending priorities.
Entitlements, dependence, and the politics of populist redistribution. Redistributionist policies (taxing the rich at progressively higher rates and giving it to the poor — or borrowing from other countries or other generations for the same purpose) promote a “something-for-nothing” mentality and delegitimizes earned success. Some “claim that our opportunity society no longer really works. The irony here is that something-for-nothing politics can itself make the claim come true—if pursued on a sufficiently grand scale and in a sufficiently reckless manner.”
Eberstadt’s point here is a moral one: entitlements are corrupting. William Galston of the Brookings Institution disagrees. In a dissenting viewpoint published in Nation of Takers he challenges a number of Eberstadt’s interpretations of the data and defends the growth of entitlements as part of a civic compact. He rightly points to interdependence and the principle of reciprocity that undergirds it as part of a well-functioning society: “When I do something for you that you would be hard pressed to do for yourself and you respond by helping me with something I find difficult, we depend on one another and are the stronger for it.”
Galston argues that this reciprocity extends not only between different layers of society and between regions, but through time. Thus, many entitlements involve an “intergenerational compact”. However, it is difficult to see the reciprocal principle at work when existing generations bequeath a colossally mortgaged, if not bankrupt system to those yet to be born.
Besides, isn’t there something deeply ironic, if not dishonest, about a social compact with new generations whom we admit into the world increasingly on our own strictly limited terms? The original intergenerational compact is between parents and their children, but the family has been reduced by the birth control culture that sprang up alongside the entitlement state, and broken down by collateral damage from both trends.
Indeed, as many scholars have observed, the welfare state itself is partly responsible for family breakdown. As Eberstadt puts it, “the perverse incentives embedded in federal-family support policies were actually encouraging the proliferation of fatherless families and an epidemic of illegitimacy” in the decades since 1960. And although “the tangled pathology linking entitlement programs to the feminization of poverty and the rise of the female-headed family” was partly addressed by the welfare reform efforts on the mid-1990s, the trend has continued and now 41 percent of all births in America, and more than half of those to women under 30, occur outside marriage. Just how indebted to their parents and grandparents these children and those to come will feel, remains to be seen.
As bad as this situation seems, however, it also suggests a way forward to a renewed culture of independence and interdependence. Any political regime that genuinely wants to bring public spending under control and get the economy on a sound footing will have to address the state of the family by promoting marriage, ceasing to burden the married family with unfair taxes, and withdrawing funding from educational programmes that promote sexual liberalism.
As another scholar, Yuval Levin, points out in his response to Nation of Takers (see accompanying article), the family is one of those institutions (the most important) between the individual and the state where most of life is lived and where true flourishing is possible. The role of government is to facilitate life in this realm of freedom and initiative, not to invade it and take over its various roles.
If it followed this advice, the next American government could become a model not only for conquering the debt problem, but for renewing the social contract between the generations.
Carolyn Moynihan is deputy editor of MercatorNet.