The Next Welfare Reform
Written by Lancelot Finn (Spring 2002)
America faces a serious social problem: welfare dependency. The Nazis once called for the murder of the handicapped et al., which they called “useless eaters.” In our more humane society, such calls are not heard. However, we do have government programs that reduce people to “useless eaters,” thereby marginalizing them into boredom, neglect and low self-esteem.
But I’m not talking about what is usually meant by welfare: AFDC, TANF, food stamps, public housing, and other programs targeted mainly at poor families with children. That kind of welfare was an anguished issue in America for two decades. But in 1996 Clinton and the Republican Congress “ended welfare as we knew it”—with spectacular results!
Dire predictions accompanied the passage of the 1996 bill. Critics foresaw social unrest, a surge in gang violence, hunger stalking the streets, and social and economic breakdown. Anyone who had foretold in 1996 what would follow welfare reform would have been dismissed as naïve. Crime continued to fall. With help from a surge of economic growth, many welfare recipients found jobs, breaking out of years or decades of dependency. Inequality inched upwards for a couple more years, then actually started falling for the first time since 1968.
There was even a revival in family values. While critics of welfare had occasionally claimed that welfare checks discouraged marriage, hardly anyone really thought the long slide in marriage rates would turn around. It did. Job growth created a wave of optimism in black America, where welfare dependency had been particularly prevalent. Blacks have even begun mobilizing to tackle their most intractable problems, such as failed public school systems. Substantial majorities now support vouchers, as a way of breaking the destructive environment of the ghettos and nipping the poverty cycle in the bud.
No, it is a different kind of welfare dependency that remains a problem, probably America’s biggest problem: Social Security.
Is Social Security “welfare?” Formally, it is “social insurance”: today’s recipients are just getting back what they paid for. But that is a fiction. Because the age structure of the population has changed, Social Security is a steal for today’s retirees—average estimated return, 13% per year!—and a rip-off for our generation, which may live to see the fund go broke. In the 1930s, banks were collapsing, wiping out people’s savings overnight, the economy was weak, the future a void, so Social Security was cheap and humane. Today, the banks are sound, the economy strong, retirement plans abundant and reliable—people can save for the future. Social Security is no longer “insurance,” it is simply welfare—of a perverse and expensive form.
Social Security eats up 45% of the federal budget, much more than AFDC ever did. In contrast to AFDC money, this money goes disproportionately to the well-off. Social Security costs continue to grow, starving the government of funds for education, foreign aid, you name it. Rising living standards among the elderly in the 1980s cast a large shadow of child poverty.
Social Security encourages people to quit working who are perfectly fit to continue. With today’s better health and cushier jobs, there is no reason the general retirement age should not rise to 70 and above. Of course, if some want to save up, retire early, and travel the world while they are still fit, more power to them, but that is a luxury the public ought not to finance.
Social Security, like welfare, has disintegrated family values. Chinese and Arabs are horrified by the American custom of abandoning our parents to the care of strangers—and rightly so! In retirement homes across the country, old people spend their declining years in a downward spiral of misery and loneliness. Health conditions are atrocious and little supervised—death is expected, after all, and therefore acceptable. Staff become numb to human suffering. (Mom and Dad, if you’re reading this, you have a place to stay with me when the time comes!) Social Security has contributed to the euthanasia of children’s consciences towards their parents.
It is interesting that, as the graying of America continues, the cult of youth remains as intense as ever. In all our cultural iconography, from movies to advertising music, the elderly are invisible. It doesn’t have to be that way. In colonial times, people bought grey wigs to look dignified. Now old women dye their hair from shame. That the old have been reduced to welfare dependency is part of the cause of this sad marginalization. Old people are not useless eaters, they are human beings—until responsibility for them passes to the state.
America needs a Social Security reform modeled on welfare reform. First, we should provide a small guaranteed income for the elderly, which would be cheap since middle-class elderly would opt out in favor of their own retirement plans. Second, I propose a welfare-to-work program for old people. With wireless web technology, easy jobs-at-home are more feasible than ever. The government has reams of paperwork. I propose outsourcing it to the elderly. We could provide laptop computers, brief training, wireless web connections, and a completely flexible schedule—people could work 5 hours or 50, as they preferred. Some elderly would not participate, but I suspect many would, and would prove excellent workers. Third, raise the retirement age to 70. Fourth, phase out the current Social Security payments over twenty years.
Both parties should like this plan. Democrats can celebrate the end of the payroll tax. The payroll tax is the most regressive tax on the books. For lower-income families, it is the tax burden, and removing the payroll tax would be excellent relief. Republicans should adore a pro-free-market, pro-family-values reform that dismantles the major legacy of FDR, who destroyed (according to them) America’s constitutional innocence.
However, it faces a political roadblock: the Lobbyist. I use the capital letter to distinguish the Lobbyist—the American Association of Retired Persons (AARP)—from other lobbyists, which are but a swarm of flies by comparison. The AARP has the fattest moneybags on Capitol Hill, but more importantly it sways millions of self-interested votes. The elderly, sadly marginalized in most respects by a culture that idolizes youth, have great political weight because they have more time to vote than the mobile and busy young. (Online voting could easily mend this inequity.)
Whereas mere lobbyists struggle to influence this or that obscure issue, the Lobbyist can hijack an election single-handedly. In election 2000, as a young person, I felt forgotten. As the candidates argued about prescription drug plans and vied with each other for best protector of Social Security, I just sat there wondering, “Do either of you guys care about my vote, at all?”
What did the candidates say? Gore’s “lockbox” was the epitome of populist stupidity, a low bow to the Lobbyist. Bush’s plan is more promising. It’s a bit crackpot, and it won’t work the way he promised, but it might start to unravel the system, and that’s good—if it passed. However, the Lobbyist will assure that Congress doesn’t pass it. So for now, the outlook for reform is bleak.
But the outlook for welfare reform was once just as bleak, and its success offers grounds for hope that Americans can face and overcome their greatest obstacles. Just as welfare reform proved more beneficial than even most optimists hoped, Social Security reform could lead to a renewed sense of family responsibility, to higher savings rates and faster economic growth, to a weakening of the cult of youth, and to increased social solidarity. It is up to our generation to spread the word and press forward towards the next welfare reform.
I wrote this a while back and I know a bit more about the topic now. For something more recent, take a look at “Land and Sea: Private Accounts, Social Security and Risk.”