Saving the Welfare/Warfare State
by Laurence M. Vance: Join
or Not Join?
Save the American Dream," said the subject line of the e-mail
I received from the Heritage Foundation and signed by its president,
Edwin J. Feulner.
as little as $10, I could become a member of the foundation and
get a free copy of Saving the American Dream: The Heritage Plan
to Fix the Debt, Cut Spending, and Restore Prosperity "to
share with other like minded Conservatives."
am not a conservative, I was nevertheless intrigued because of the
first paragraph of the e-mail:
the American Dream plan sets a new course for America by cutting
spending, reining in the size and scope of the federal government,
reducing the deficit and protecting defense Ė all without raising
the "About the Editors" page, Saving
the American Dream was developed as part of the Solutions
Initiative and funded by the Peter G. Peterson Foundation. The Peterson
Foundation convened organizations with a variety of perspectives
to develop plans addressing the nationís fiscal challenges. Grants
were also given to the American Enterprise Institute, the Bipartisan
Policy Center, the Center for American Progress, the Economic Policy
Institute, and the Roosevelt Institute Campus Network. The final
plans of each organization were presented as part of the Peterson
Foundationís second annual Fiscal Summit in May of 2011.
agree with what Feulner says in his foreword:
our national government has become bloated, overextended and unrestrained,
oblivious of its core functions, operating far beyond its means
and vastly outside of its proper constitutional bounds. Unchecked,
the course we are on now will cripple our economy, undermine our
prosperity, and lead to fiscal insolvency. By robbing the future
of opportunity and freedom, it will destroy the American Dream
for future generations.
fate does not have to be our future. We can get spending under
control, balance the budget, and shrink our debt. We can limit
the size of government and set free once again the unlimited genius
of Americans to create wealth and jobs. We can turn the tide and
change our nationís course.
there is very little else in the plan that I can agree with.
high hopes for the Heritage plan:
the American Dream is our plan to fix the debt, cut spending
and, above all, restore prosperity. It balances the nationís budget
within a decade Ė and keeps it balanced. It reduces the debt and
cuts government in half. It eliminates government-mandated health
care and fully funds our national defense. In order to get our
fiscal house in order, we must address Social Security, Medicare,
and Medicaid, the three so-called entitlement programs which together
account for 43 percent of federal spending today. Far too many
seniors still lack enough help to avoid poverty. Saving the American
Dream therefore does not end these programs; instead it focuses
them on those who need them.
also encourages Americans to become more fiscally responsible
themselves. It redesigns our entire tax system into an expenditure
tax that will have a single flat rate. This is a structure that
will promote savings, therefore benefiting individual Americans,
our body politic, and the economy.
substantially reduces the size and scope of the federal government,
fundamentally increases the role of the states in choosing their
own practices, and brings decision-making closer to the people
rather than unelected administrators.
I can already
see that the plan is destined to fail and I havenít even got past
the foreword. Perhaps the introduction will change my mind.
the introduction to Saving the American Dream gives us more
details about the plan, Iím afraid it has only cemented my pessimistic
opinion. I agree that "the government is doing things it should
not be doing and spending far more than we can afford to pay or
should be paying." I also agree that
prosperity and growth for ourselves and our children, we must
reduce the federal government so that it is closer to its proper
size and focus it on performing its core responsibilities. This
will mean deep and sustained reductions in federal spending. We
must also hold down taxes while reforming our needlessly complex,
burdensome, and highly unfair tax system to sharpen incentives
and reward saving if we want America to be prosperous once again.
maintains that "the Heritage plan will solve Americaís twin
crises of debt and spending with reforms that are consistent with
the principles of democratic governance and deeply held American
values." Then follows eight specific things the Heritage plan
the federal budget within a decade and keeps it balanced forever
at no more than 18.5 percent of GDP.
the debt to 30 percent of GDP within 25 years and puts it on track
to continue falling thereafter.
- Cuts the
size of the federal government by about half within 25 years.
- Stops scheduled
tax increases and replaces the complex and unfair tax code with
a completely new tax system.
America and its interests around the globe by ensuring full funding
for national defense.
Obamacare and creates a health care system that is affordable
both for the nation and for individuals and families.
Social Security and Medicare as sustainable programs that truly
protect seniors and will be around for our children and grandchildren.
powerful incentives for working Americans to save and invest so
that they will be less dependent on these programs.
is the problem. Or should I say problems.
to balance the budget within ten years are absolutely meaningless.
Even the Republican spendthrifts in Congress make promises like
- The Heritage
plan will keep the budget "balanced forever"? Even Paul
Ryan wouldnít make a claim like that.
- Tying the
federal budget to a percentage of GDP is a license for ever-increasing
to reduce or cut something "within 25 years" are even
more ridiculous than balancing the budget within a decade.
the tax code with a "fairer" tax code instead of getting
rid of it altogether is no solution at all.
funding for national defense" means that defense department
budget cuts are off the table. It also means that the U.S. empire
of troops and bases that encircles the globe will remain intact.
It also means that the foreign wars will continue. It also means
that an aggressive, reckless, interventionist U.S. foreign policy
will continue. It also means that the warfare state will continue.
It also means that military
Keynesianism will continue.
- If the
Heritage plan said it "eliminates Obamacare" and that
was it, then that would be a good thing. But no, instead of leaving
the nationís healthcare system completely up to the free market
that the Heritage Foundation claims to believe in, Saving the
American Dream creates a new health care system. And since
when is it the job of the government to "ensure that Americans
can afford adequate coverage"?
Social Security and Medicare instead of phasing them out simply
means that Heritage wants to save and redesign the welfare state.
After all, as the introduction to Saving the American Dream
points out, "The three entitlements Ė Social Security, Medicare,
and Medicaid Ė account for 43 percent of federal spending."
plan to "save" Social Security includes a gradual transition
to a flat benefit, means-testing eligibility for benefits, raising
both the normal and early retirement ages and indexing them to increases
in longevity, an a $10,000 annual tax deduction for those who work
past their full-benefit retirement age. This is all well and good,
but it still doesnít change the fact that Social Security is an
intergenerational, income-transfer, wealth-redistribution welfare
program. I have discussed the problem with conservative plans to
save Social Security here.
plan to "save" Medicare would transform the program from
"an open-ended and unsustainable defined-benefit entitlement"
program into a "defined-contribution system." New retirees
would receive a "contribution" from the government, "just
as federal employees and retirees do today," to be applied
toward Medicare or an existing health insurance plan. Low-income
enrollees would receive a full contribution. High-income enrollees
would "receive no government contribution and pay full, unsubsidized
premiums." The Medicare eligibility age would gradually rise
to 68 over a ten-year period and be indexed to increases in longevity.
is not the only government involvement in health care under the
Heritage plan. Medicaid (health care for the poor) would continue.
A health care tax credit would be made available "to offset
the cost of coverage offered through the workplace or to buy insurance
outside the workplace." For those with no income tax liability,
"financial assistance for purchasing insurance" will be
is always at the forefront of any conservative plan. In this respect,
the Heritage plan doesnít disappoint. The current system would be
transformed into "a modern flat tax that taxes individual income
only once and replaces all federal income taxes, all payroll taxes,
the death tax, and virtually all excises." A new flat-rate
tax of between 25 and 28 percent, designed "to raise a permanent
revenue stream of up to 18.5 percent of the economy as measured
by GDP," would be applied to income "after deducting all
savings." It would include deductions for education expenses,
charitable giving, and mortgage interest and an earned income and
health insurance credit. What is unique about the Heritage flat
tax plan is that it would fold "todayís federal payroll taxes
financing Social Security and Medicare into the new system."
I have discussed how the Heritage flat tax plan is still a progressive
tax and therefore a vast income redistribution and social engineering
spending reforms" in the Heritage plan include reducing "non-defense
discretionary spending" (foreign aid, K-12 education, transportation,
health research, housing, community development, veterans health
care) from the current rate of 4.5 percent of GDP down to 2 percent
of GDP "by 2021." Antipoverty spending is "reformed."
Agriculture and education programs are "structurally reformed."
Amtrak subsidies are "phased out over three years." Most
non-defense discretionary spending would be frozen "at 2008
levels through 2015" and then capped "at the inflation
And then there
are the usual meaningless government reform clichés:
programs should be consolidated.
and ineffective programs should be eliminated.
- Waste, fraud,
and abuse should be cleaned up wherever found.
and the Democrats have said the same things.
Are there any
good things in the Heritage plan that would take effect right away
instead of years down the road? Lower-priority spending, "such
as subsidies to public broadcasting, AmeriCorps, the National Endowment
for the Arts, and the National Endowment for the Humanities, is
left to the private sector." I guess this means that government
funding would be cut off for these programs. The Heritage plan calls
for the elimination of the 18.3 cents-per-gallon federal gas tax
and transferring the highway program to the states, federal funding
for passenger rail, and "all non-safety functions of the Federal
Aviation Administration," which would be transferred to the
private sector along with the air traffic control system.
All in all,
the Heritage plan is better than Paul
Ryanís budget, "The Path to Prosperity: A Blueprint for
American Renewal," but how hard is it to do that?
to the problems I see with the Heritage plan that I have pointed
out already, I just want to mention three things.
One, why only
return government spending to 2008 levels (the last year we had
a Republican president)? Doesnít the Heritage plan even acknowledge
that "since 2000, non-defense discretionary outlays have expanded
50 percent faster than inflation," with spending on anti-poverty
programs rising "83 percent faster than inflation"? Why
not return spending to the level it was in, letís say, 1999 or 1989?
Even that would, of course, be an obscene level.
Two, the Heritage
plan says that "the federal government should focus on performing
a limited number of appropriate governmental duties well while empowering
state and local governments, which are closer to the people, to
address local needs." The problem is a simple one: It is not
the proper role of government to provide retirement or disability
benefits, pay for anyoneís health care or insurance, provide housing
or agricultural assistance, subsidize anyoneís education, or dole
out foreign aid.
itís not just that the Heritage plan to save the American dream
continues the welfare state, itís that thereís not even mention
of a transition of any number of years to its gradual elimination
in any number of years. And, of course, the warfare state would
be expanded in perpetuity.
to the Heritage Foundationís Saving the American Dream for
saving the welfare/warfare state.
M. Vance [send him mail]
writes from central Florida. He is the author of Christianity
and War and Other Essays Against the Warfare State, The
Revolution that Wasn't, and Rethinking
the Good War. His latest book is The
Quatercentenary of the King James Bible. Visit his
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