Saving safety net from the left

Posted: October 22, 2012

"The press is trying to paint me as trying to undo the New Deal. ... I'm trying to undo the Great Society."

- Ronald Reagan, January 1982 diary entry

Faced with an economic crisis during his first year in the Oval Office, Ronald Reagan was demagogued by the media, welfare-industry lobbyists, and Democratic leaders who accused the former California governor of balancing the budget on the backs of the poor, elderly, and disabled. Although the most popular president since Franklin Roosevelt did nothing of the sort, President Obama thinks the same scare tactics - claiming that Mitt Romney will kick nursing-home recipients off Medicaid - will salvage his teetering poll numbers in battleground states.

To be sure, Reagan was the only president to reverse the runaway growth of "means-tested" welfare since Lyndon Johnson's imposition of the Great Society. Although modest, his tempering of federal antipoverty expenditures, from 2.6 to 2.2 percent of GDP between 1981 and 1989, demonstrated that preserving the safety net for the truly needy does not require an ever-expanding welfare-industrial complex, the left's top priority even when poverty indicators drop.

Indeed, by boosting the prospects of all Americans in every station in life while "rightsizing" welfare, the 40th president also confirmed that the booty of the War on Poverty - whose countless programs, from Medicaid and food stamps to Head Start and Temporary Assistance for Needy Families (TANF), now consume double the federal resources (4.7 percent of GDP in 2011) they did under the Gipper - has been overrated. The reality is that antipoverty outlays, costing taxpayers $927 billion last year, have grown faster than any other category of government spending since Reagan left office. Yet poverty and dependency levels have been rising since 2000, a reversal of the Reagan pattern.

The Great Communicator upended the liberal narrative by scaling back the intrusions of the Great Society but shoring up self-financing New Deal entitlements such as Social Security, as he did in 1983. This forgotten distinction between social insurance and social engineering is critical, as the welfare behemoth launched by LBJ - unlike FDR's New Deal - has fueled pathologies that prevent increasing numbers of Americans from achieving middle-class status: the retreat from marriage, unwed childbearing, divorce, non-marital cohabitation, and declines in labor-force participation rates of men.

While think tanks from the Brookings Institution to the Heritage Foundation have documented links between family breakdown and means-tested welfare spending, economist John D. Mueller has established a correlation between welfare and male unemployment. In his book Redeeming Economics, Mueller estimates that every 1-percentage-point increase in welfare spending relative to GDP translates into a 2-percentage-point decrease in the employment-population ratio for men.

Thank goodness that Republicans are calling not only for welfare-spending restraint, but also for fundamental government reform, reform that would return to the states the flexibility and authority to run public-assistance programs that they enjoyed in the New Deal era, before LBJ brought in the social engineers.

Driving this recovery of the Reaganite vision are governors who find their backs against the wall with Medicaid. With a caseload that now numbers 62 million adults and children, the elephant-in-the-room continues to bust state budgets, holding commitments to education and transportation hostage. Until the Supreme Court axed a key dictate of Obamacare in June, the Medicaid system was on track to enroll a quarter of the U.S. population.

Contrary to Obama's rhetoric, the GOP has no desire to obliterate health-care subsidies for disadvantaged citizens; its governors simply believe they can run Medicaid better without the federal welfare bureaucracy, a costly middleman that demands its cut while imposing a mandates-and-regulations maze that not only invites waste and fraud but also hinders the delivery of improved health-care options to the destitute and disabled. These pragmatic governors see streamlined "block grants" of defined amounts of federal dollars to the states - ideally via checks cut directly from the U.S. Treasury and bypassing the Centers for Medicare and Medicaid Services - as more promising than the status-quo "matching" scheme that rewards states for boosting caseloads and overhead.

The block-grant innovation is no right-wing fantasy. It ensured the success of the bipartisan legislation creating TANF in 1996. And it worked with Medicaid after Rhode Island secured a broad, five-year waiver from federal red tape in 2009 in exchange for a reduction in projected federal-state Medicaid spending. When scrutinized by the Lewin Group, the respected consulting firm concluded that the reform was not only "highly effective in controlling Medicaid costs," but also improved "access to more appropriate services" for recipients, especially the disabled and the elderly.

Looking for similar results in Pennsylvania, Gov. Corbett tapped the architect of the Rhode Island initiative, Gary Alexander, as his public welfare secretary. That was before Obamacare slammed the door on fixing Medicaid. Alexander has nonetheless lowered the commonwealth's overall welfare trajectory, saving taxpayers $1.9 billion since 2011. (Full disclosure: I worked for Alexander during my time in the Corbett administration.)

These real-world achievements suggest that the demonization of Romney as an enemy of the poor is an act of desperation. They also debunk Paul Krugman, the New York Times columnist who has framed the election as "a referendum on our social insurance system," casting Republicans as bogeymen "who want to return us to the Gilded Age." Far from it. Like Reagan, Romney simply wants to protect a safety net built on conservative New Deal principles from the Great Society-like overreach of Obama.


Chat live with Robert W. Patterson Monday at 1 p.m. at www.philly.com


Robert W. Patterson is editor of the public-policy journal The Family in America. E-mail him at rwpatterson79@gmail.com.

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