Strengthening Constitutional Self-Government

No Left Turns

Democracy and the Welfare State

Last week I blogged that taxes should be high enough "to pay for the things the government needs to do."  And which are those?  "In a democracy, all the things the people feel the government really ought to do."  Thus, I wrote, "I'm happy to abide by the outcome of the democratic debate over that question, but I think it should be conducted honestly. Honesty requires stipulating that the amount of government we get is no larger than the amount we're willing to pay for, as opposed to the dream-world welfare state we would build if wealth were limitless."

Some commentators objected to this formulation as being too receptive to a growing welfare state.  Joel Mathis, who got this discussion started, welcomed my framework as being more conducive to the welfare state than conservatives usually are, or than most liberals assume most conservatives are.

So, am I a squish on the question of the welfare state?  I prefer to think that I am restating the fundamental facts about how the question will and should be considered and settled.  Let me cite, as we Claremont types must, Abraham Lincoln, who said in 1858, "In this and like communities, public sentiment is everything. With public sentiment, nothing can fail; without it nothing can succeed. Consequently he who molds public sentiment, goes deeper than he who enacts statutes or pronounces decisions. He makes statutes and decisions possible or impossible to be executed."  Or, as he put it in 1861, "A majority held in restraint by constitutional checks and limitations, and always changing easily with deliberate changes of popular opinions and sentiments, is the only true sovereign of a free people."

I was trying to say last week what I took Lincoln to have been saying 150 years ago: Majorities can err, but the only safe and legitimate corrective for those who believe that the majority has erred, or is about to, is to mold public sentiment so that bad policies become untenable.  America's welfare state has grown for the past 80 years because people like getting what it provides.  There are two reasons it hasn't grown even faster.  The lesser one is that people have some qualms, now largely forgotten, about the legitimacy of having the government redistribute wealth from some people to others.  The more politically consequential reason is that people like getting what the welfare state provides much more than they like paying for what it costs. 

Unfortunately, the path of least political resistance, giving people the big welfare state and small tax bills they want, leads to the edge of a cliff, one that is now in view as federal debt held by the public will head north to 100% of GDP in a little over a decade if we adhere to President Obama's 2012 budget.  The tag line from a Michelob Lite commercial in the 1980s was, "Who says you can't have it all?"  Reality, that's who, George F. Will wrote at the time.

Reality remains inflexible about this business of giving the whole country New York's welfare state and South Dakota's tax system.  Intellectually honest liberals say that if we want not only the big welfare state we already have, but the much bigger one depicted in any randomly selected Democratic party platform from the past 40 years, we'll have to have much higher taxes.  Barack Obama's intellectual dishonesty led him to promise that we can finance a much bigger welfare state if the most prosperous 3% of us, those making more than $250,000 per year, pay higher taxes while the rest of us get taxes that remain where they are or diminish. 

As Matthew Yglesias argued, there's a practical and a political problem with this approach.  The practical problem is that America is already raising a higher portion of its tax revenues from the wealthy, and further tax increases on the rich can raise only a limited amount of additional revenue.  "An extra annual tax of $500 per capita could raise almost $150 billion," he wrote.  "Obtaining a comparable amount from the top 1 percent of individuals would require $50,000 from each of them, an amount that the very wealthiest could easily pay but that is probably an unrealistic burden on those near the bottom of the top 1 percent. To get a lot of money you need to be willing to take at least a little from a broad group of people."

The political problem, according to Yglesias, is that, "A platform of no tax increases for the bottom 95 percent can win elections, but it reinforces rather than debunks the right's fundamental view of the tax question -- that public services aren't worth paying for -- and merely suggests that the correct answer is to get someone else to pay for them.... At the end of the day, persuading people to support a more active role for government means persuading all of them that such a government is worth paying for."

That fact that so few liberals - not just in politics but even in the safe harbors of journalism, academia and think tanks - have tried to convince Americans that a more active role for government is worth paying for, by all of us, suggests they don't believe there will be many takers for that proposition.  I suspect they're right: the welfare state we'll have if its costs are honestly reckoned and realistically shared will be much smaller (and much smarter) than the one we have now.  This is the case I understand Congressman Paul Ryan to be making, and one that other conservatives should be pressing as well.

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