For years, fiscal conservatives have been arguing that the American welfare state has grown too large, too cumbersome, for even such a great a nation as ours, and they’re right.
The problem is that, for just as long as they’ve been making this argument, conservatives haven’t had a real alternative proposal, just as they didn’t when they tried to “repeal and replace” Obamacare. Instead, they were mostly just interested in doing away with the welfare state entirely – or as much as possible – and shrinking the size of government, without offering their own plan to assist people.
That’s been a tough sell politically, as you’re essentially telling voters that we ought to eliminate popular programs without any viable alternatives. Polling has born this out over the years: When pollsters ask the public about cutting the size of government, they often support it as a concept, but when they’re asked about cutting or eliminating specific programs, they have trouble identifying any to eliminate. We find a similar phenomenon in polls about Congress: Most Americans loathe Congress collectively, but usually approve of their own representative. That’s a big part of the reason that term limits haven’t gained traction at the national level, despite being a popular talking point on both the right and the left.
Very quietly, the stimulus programs enacted during the pandemic have shown conservatives a path forward toward reducing the size of government without reducing benefits. The direct payments sent to individuals without need of a cumbersome application could be a model for future reforms of both welfare and entitlements. Now, the direct payments were far from perfect. Like any program enacted during a crisis, it was rushed; like every government program ever enacted, it had flaws. People got the payments who weren’t suffering financially and so, by some definitions, didn’t really “need” them. Others who did need the assistance weren’t able to get it, for a variety of reasons. Moreover, the payments didn’t replace any other form of spending: They were just another bonus added on to the overall package each time.
Going forward, these direct payments could be dispersed to needy individuals in a more focused way as a replacement for other programs, rather than as a supplement. They somewhat resemble the concept of universal basic income, which was proposed in Switzerland (a version of which was endorsed by Democrat Andrew Yang during the 2020 presidential race) but would differ in a few key respects. Most versions of universal basic income emphasize the “universal” aspect: Everyone gets a regular payment no matter what. The direct payments included in the stimulus package weren’t universal in any of the versions; they always were based on income thresholds and number of children. That’s more reasonable, and more in line with traditional U.S. government policy.
While the concept sounds revolutionary, it really isn’t: Richard Nixon proposed a negative income tax that resembled universal basic income. Although the negative income tax failed, it provided the inspiration for a government program that has become a key tool in the anti-poverty toolbox: the Earned Income Tax Credit. The EITC has proven an effective tool in fighting poverty, but it does require an application, which means that every year eligible Americans don’t get the benefit to which they’re entitled. If payments were simply sent directly to every eligible American based on their tax returns, as the stimulus payments did, it could not only prove more effective in fighting poverty but also cost less in overhead. That would fundamentally transform the EITC back into the concept upon which it was based, while simultaneously proving more efficient.
The same process could be carried over to other needy groups based on factors other than number of dependents and income level – like age. We could provide greater assistance to older Americans through direct payments, much like Social Security does today but with fewer bureaucratic loopholes to jump through.
In the past, concepts like the negative income tax and the universal basic income have failed because economists and fiscal conservatives alike saw them as disincentivizing work, but that perception may have been broken in the past year. Not only have they proven exceptionally popular among the public as a whole, but they’ve also been supported by politicians on the left, right and center from both parties. Not many policies in Washington these days attract such wide levels of support.
This could well become one of the positives to come out of the past year, if policymakers gave it real consideration going forward.
Jim Fossel, a conservative activist from Gardiner, worked for Sen. Susan Collins. He can be contacted at:
jwfossel@gmail.com
Twitter: @jimfossel
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