Buying Socialism for $3.5 Trillion

10/06/2021

I can understand the desperation among Democrats to get their $3.5 trillion reconciliation bill passed. After all, it might be their last chance in a long while to expand our socialist welfare state. Republicans are fighting back, and vigorously for a change, in ways reminiscent of their resistance to Obamacare a decade ago.

Republican resistance is based primarily on the cost of the bill. There is nothing wrong in this: cost of the bill is outrageous, especially since it piles even more debt onto the shoulders of our grandkids. In fact, funding this bill with deficits is the absolutely worst way to expand the welfare state like the Democrats now want to do; paying for it with taxes would in some ways have been less harmful, at least for the long term.

Before anyone construes that as an argument for tax hikes, let me make clear: the choice between funding a welfare state with deficits and funding it with taxes is the choice between being garroted and being hanged. It is not the choice between a path to prosperity and a path to poverty; both the tax road and the deficit track lead to the same destination: a fiscal and macroeconomic disaster for America.

Given the bad fiscal and economic consequences of the bill, it is refreshing to see Republicans fight back. Among them, Senator Lummis (R-WY) has stood out as a leader. But Republicans are still not using all the arrows in their quiver, and they need to do so in order to win this battle, or at least mitigate the losses to America.

The most significant policy achievement of the $3.5 trillion spending spree is its expansion of the American welfare state. This expansion, in turn, is entirely ideological. As I have explained in two books, The Rise of Big Government and Democracy or Socialism: The Fateful Question for America in 2024, the American welfare state is built according to the very same ideological architecture as, primarily, the Swedish welfare state and, secondarily, the broader democratic-socialist ideology that shaped much of the social and economic evolution of Western Europe in the decades after World War II.

In short: what we have here, disguised as an “infrastructure bill” is a package of legislation aimed at further aligning America with Europe’s most notorious welfare states. The alignment comes in the form of new and expanded entitlement programs. Let’s take inventory:

• Two years of free community college. By making college tuition free, government eliminates individual responsibility for higher education. Its status is changed from a service you buy to improve your career prospects, to an entitlement that you have the right to simply by virtue of being who you are. In an ideological meaning, this is no different from government providing you with housing, food or the means of transportation.
• Tax-paid child care and two years of universal pre-K. While child care will not be entirely free for all entitled parents, this bill would take a big step in that direction. The universal pre-K reform has the same effect. In both cases, the service provided is transformed from a matter of personal responsibility to an entitlement. Proponents point to K-12 and ask if that is also an entitlement, and the answer is simple: yes. Our public school system is an entitlement. What we think of it from an ideological or less complex moral viewpoint, is a different matter. But it is also important to remember that when parents lose the responsibility to care for their children, they also lose the interest in financially providing for their family. This as broad consequences rarely brought into the picture in the debate over government-funded child care and pre-K.
• Medicare expansion to include dental care, among other things. This is the first step toward integrating dental care into government-provided health insurance (Medicaid would be next) and government-mandated health insurance. Eventually, dental care will become a component of a single-payer health care system that replaces what we have left of a privately funded system. I should point out that in Sweden – the dreamland of the American left – dental care is not part of the single-payer health plan. It is fairly costly and can often cause financial problems for patients with modest incomes.
• De facto permanent child-tax credit. Here we have yet another cash handout, mimicking the child-benefit checks paid out in countries like Sweden and Denmark. Over there, they have been independent of the parents’ income, but that does not change the fact that they are classic examples of entitlements: you get them simply by virtue of belonging to a group deemed eligible by government. The American version is tied to parental income, but the threshold is so high that a large majority of families will qualify.
• Subsidies and regulations to reduce prescription drug prices. The Medicare system will be given the authority to negotiate for prescription-drug prices. This is a dangerous path to go down. First of all, it turns a private product into a government-provided good: the price is no longer market-based, but will be based on the value that government assigns to it. Thereby, the product will de facto be provided by government, with the incentives to sell the drug being driven not by patient need but by the price preferences of the government. These preferences, in turn, will be based on how government prefers to allocate its subsidies: if, e.g., government does not want to subsidize – and negotiate down the prices of – medicine for dementia, and instead prioritize tobacco addiction treatment, then patients who would like treatment for dementia are left to fend for themselves.

In other words, personal choices are replaced by government priorities, and government priorities are always based on ideological preferences. Possibly with the exception of national defense, government never makes priority decisions without considering the ideological outcome of the decision. When Congress decides to spend more money on entitlements generally and less on national defense, the priorities are driven by an ideological desire to increase income redistribution and reduce economic differences between individuals and families.

Likewise, the decision to create these new entitlements – should Congress pass the $3.5 trillion monstrosity – is ideological. It is driven by a desire to increase benefits for low- and middle-income families relative families with higher incomes. Even when a benefit is provided without an income cap, it is still a tool for economic redistribution: the value of the benefit is the same to all entitlees, making it relatively more valuable to those with lower incomes.

It is always tempting to expand the welfare state for reasons of general benevolence: why should we not give everything to everyone for free? It is also tempting for opponents of the socialist redistribution doctrine to humbly bow their heads and refrain from opposing the perceived benevolence of the socialist. After all, who wants to come across as evil and as denying the poor, hungry, starving child a fighting chance in life?

The problem is that this image is a complete non-sequitur of the socialist redistribution argument. None of the entitlements proposed in the $3.5 trillion monstrosity does anything to elevate anybody out of an existence in the gutters with rags and an empty stomach. Our society has long passed that level of poverty; the homeless problem we see across the country today is almost entirely driven by drug addictions, mental illness and other individual problems – it is not driven by generic poverty. Therefore, it is simply false to try to claim that we need to further expand the welfare state in order to cure girl-with-the-matchsticks poverty.

It is also worth noting that we as a society would not accept widespread poverty at that level, even if we had no tax-paid welfare system. We would use charitable organizations as a means to provide adequate help. Anyone objecting should ask him- or herself:

• What would you do if your neighbor starved – leave him be or help him?
• Why do you think other people are less inclined to help than you are?

In other words, compassion and charity are not government monopolies. The alternative to the socialist welfare state is built in the intersection between private charity and personal responsibility. It is right there that America’s conservatives need to build their ideological counter-argument to the unending effort by the socialists to expand the welfare state.

Which brings me to the one point that perhaps perplexes me the most with the conservative movement. There seems to be a premise underlying their efforts to counter the left: every step the left takes to grow government is an isolated incident. Conservatives tend to believe that if they just defeat this one entitlement idea; if they just win this particular ideological battle; they will have won the war. Nothing could be further from the truth. As I explain in my book Democracy or Socialism: The Fateful Question for America in 2024, socialists keep growing government simply because their ideology prescribes as much.

Simply: socialists will grow socialism until their ideological end goal is reached. That end goal is simple: the elimination of all economic differences between all individuals in society.

The only way to stop this incrementalist movement of America toward the socialist finishing line is to engage in a coherent, well formulated and thoroughly determined ideological counter-campaign that:

• Exposes the socialist agenda for what it is and what it wants to accomplish;
• Lays out an ideological alternative; and
• Explains how the alternative to socialism is better for the poor and the destitute.

Are America’s conservatives up for it? Do they have what it takes? Not right now. But my book Democracy or Socialism: The Fateful Question for America in 2024 gives them a lot of mileage.

Written by S R Larson Posted in Uncategorized