Government Healthcare

AN AMERICAN REVOLUTION

https://www.nationalaffairs.com/publications/detail/american-exceptionalism-and-the-entitlement-state

American Exceptionalism and the Entitlement State (Part II continued from April)

Nicholas Eberstadt

Winter 2015

The road to our modern welfare state traces its way through northern Europe, most notably through Bismarck’s social-insurance legislation in late 19th-century Germany, Sweden’s pioneering “social democracy” policies during the interwar period, and Britain’s 1942 “Beveridge Report,” which offered the embattled nation a vision of far-reaching and generous social-welfare guarantees after victory.

Over the first three decades of the 20th century, while welfare programs were blossoming in Europe, in the United States the share of the national output devoted to public-welfare spending (pensions, unemployment, health, and all the rest) not only failed to rise but apparently declined . . . Thirty-six European and Latin American countries — many of which lagged far behind the U.S. in terms of educational attainment and socioeconomic development — already had put in place nationwide “social insurance” systems for old-age pensions by the time the United States passed the Social Security Act in 1935, establishing our first federal legislation committing Washington to providing public benefits for the general population.

. . . In 1961, at the start of the Kennedy Administration, total government entitlement transfers to individual recipients accounted for a little less than 5% of GDP, as opposed to 2.5% of GDP in 1931 just before the New Deal. . .

During the 1960s, however, America’s traditional aversion to the welfare state and all its works largely collapsed. President Johnson’s “War on Poverty” (declared in 1964) and his “Great Society” pledge of the same year ushered in a new era for America, in which Washington finally commenced in earnest the construction of a massive welfare state. In the decades that followed, America not only markedly expanded provision for current or past workers who qualified for benefits under existing “social insurance” arrangements (retirement, unemployment, and disability), it also inaugurated a panoply of nationwide programs for “income maintenance” (food stamps, housing subsidies, Supplemental Social Security Insurance, and the like) where eligibility turned not on work history but on officially designated “poverty” status. The government also added healthcare guarantees for retirees and the officially poor, with Medicare, Medicaid, and their accompaniments. In other words, Americans could claim, and obtain, an increasing trove of economic benefits from the government simply by dint of being a citizen; they were now incontestably entitled under law to some measure of transferred public bounty, thanks to our new “entitlement state.”

The expansion of the American welfare state remains very much a work in progress; the latest addition to that edifice is, of course, the Affordable Care Act. Despite its recent decades of rapid growth, the American welfare state may still look modest in scope and scale compared to some of its European counterparts. Nonetheless, over the past two generations, the remarkable growth of the entitlement state has radically transformed both the American government and the American way of life itself. It is not too much to call those changes revolutionary.

. . . Over the past half-century, social-welfare-program payments and subventions have mutated from a familiar but nonetheless decidedly limited item on the federal ledger into its dominant and indeed most distinguishing feature. The metamorphosis is underscored by estimates from the Bureau of Economic Analysis, the unit in the federal government that calculates GDP and other elements of our national accounts. According to BEA figures, official transfers of money, goods, and services to individual recipients through social-welfare programs accounted for less than one federal dollar in four (24%) in 1963. . . But by 2013, roughly three out of every five federal dollars (59%) were going to social-entitlement transfers. The still-shrinking residual — barely two budgetary dollars in five, at this writing — is now left to apply to all the remaining purposes of the federal government, including the considerable bureaucratic costs of overseeing the various transfer programs under consideration themselves.

Thus did the great experiment begun in the Constitution devolve into an entitlements machine — at least, so far as daily operations, budgetary priorities, and administrative emphases are concerned. Federal politics, correspondingly, are now in the main the politics of entitlement programs — activities never mentioned in the Constitution or its amendments.

To be continued in June as THE ROAD TO WELFARE

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 Government is not the solution to our problems; government is the problem.

– Ronald Reagan