Friday, September 2, 2011

The (premature) Death of the Roosevelt Consensus

Michael Gerson penned a column for the Washington Post yesterday asking a very important question:  Has mainstream American thinking about entitlement programs and government spending changed in the past few years?  The answer he gives is more or less a big perhaps.  Gerson is an unabashed conservative who served as a speechwriter and advisor to President George W. Bush so it should not be surprising he would write such a column trumpeting Gov. Perry's opposition to the New Deal and its legacy program, Social Security.  Eradicating Social Security has always been a goal of staunch conservatives, primarily because it is an example of liberal government successfully addressing a major societal problem (senior poverty).  Most rational conservatives understand that Social Security has lifted the standard of living for many seniors and disabled people in America, thus making the whole of society better off.  These rational conservatives, such as Mitt Romney and Jon Huntsman, follow in the footsteps of Ronald Reagan (who ensured the solvency of the program through 2035 with reforms in the 1980's) and Dwight Eisenhower who cautioned his fellow Republicans that any attack on Social Security will doom the party to minority status permanently.  Yet, there are still those who cling to the notion that it is a 'ponzi' scheme and an unjust transfer of wealth from workers to retirees (really YOU know anybody who is getting rich on Social Security?).  It seems Rick Perry has forgotten Eisenhower's warning.

Gerson goes on to quote Perry as follows:

“that the Progressive movement was the beginning of the deterioration of our Constitution from the standpoint of it being abused and misused to do things that Congress wanted to do, and/or the Supreme Court wanted to implement. The New Deal was the launching pad for the Washington largesse as we know it today.”
The Progressive movement that brought about things like the end of legalized segregation, discrimination on the basis of race, guaranteed the right to vote for African-Americans, protected defendants from overwhelming state power in criminal trials, reduced the poverty rate, improved educational standards for all Americans, electrified much of the rural south, and guaranteed access to medical care for our senior citizens is now responsible for 'the deterioration of our constitution' according to Mr. Perry.  Does he really want to return to pre-New Deal America?  An America where two classes of people existed, the very rich and the very poor.  There was no 'middle class' to speak of in 1933.  It, too, was created largely by the 'Progressive movement' Governor Perry disdains so much.  And the creation of that middle class, not the rugged individualism Perry touts, is what created the 'American Century' and led the United States to become the most powerful nation on earth.  
Gerson then states three possible outcomes of Perry's rhetorical attack on the New Deal:
  • Republican primary voters will question his electability and turn towards Romney
  • Republicans will embrace the message and alienate enough voters to reelect Obama
  • Perry and the Republicans have tapped into an ideological sea change and will lead the nation out of the 70 long years of darkness imposed by radical liberalism
From Gerson's analysis of the possibilities it is clear he thinks the third is the more likely, though he makes his case using selective information, none of which he is specific about.  Instead he asks, "Will America need to break decisively from the European social model to avoid Europe’s economic fate?" without providing even the slightest detail about what the phrase 'Europe's economic fate' means.  The savvy reader will understand he speaks of Greece, Ireland, Portugal, and perhaps the U.K. and the budget woes those countries have had in recent years.  He implies that those woes are a direct result of European social democracy, i.e., the welfare state, neglecting the fact that the whole world has been in the midst of an economic slowdown for nearly four years that was brought about by bad decisions by lenders, consumers, and the collapse of the housing market.  In the midst of this global recession many European nations have managed quite well, even running budget surpluses while still providing all the social welfare benefits promised.  See the chart here for more information.  Many will return to surpluses once the economy has fully recovered, if it is able to do so.  

In the end, it is a fallacious argument to attribute America (and the world's) debt problems to social programs.  Medicare and Social Security have both run a surplus for decades.  Due to uncontrolled inflation in health care costs the surplus for Medicare will likely run out by 2021, if not sooner.  Social Security currently has around $2.4 trillion in surplus and is expected to remain fully solvent through 2035, though reductions in the payroll tax designed to stimulate the economy may decrease that by a year or so.  Reforms are necessary.  Everyone agrees, liberals as well as rational conservatives.  
The real problem, which radical conservatives are loathe to admit, is that they (and many Democrats) have pursued unwise fiscal policy since 2001, enacted huge tax cuts while fighting two wars, created a Medicare prescription drug benefit without paying for it, and expanded the defense budget.  New spending coupled with tax cuts has created the problem, not the Progressive movement.  Get it right Governor.

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