America used to be a land where we took care of our own. Times are changing. Today, some would have the weakest and most vulnerable among us tighten their belts, lower their expectations, and take care of themselves.
President Obama called the question on those individuals and on the shape and size of the nation’s safety net in his inaugural address. A debate has been requested and it is an essential one for the future of our democracy and the American dream.
For far too long, as the heated rhetoric and the words have piled up about the debt and deficit, those at the bottom and middle of the heap have been invisible or ignored. This new framing will make the ongoing discussion and dialogue regarding whom to protect and where to cut more transparent and should ensure that decisions are made based upon a full understanding of the current context and future consequences for the American economy.
America has always been known as a country of rugged individualists. Until the Great Depression the social contract was an illusory concept and social safety net services provided by government were slim to non-existent. Then, in 1935, Social Security legislation was passed and the country moved into the first of what we label three phases of government involvement: Hands-On, Hand-Up, and Hands-Off.
Hands-On Phase: The hands-on phase, which expanded government social services substantially, lasted for nearly one-half century from the mid 1930s to the end of the Carter administration. Programs implemented during that time frame, in addition to social security, included: Medicare, Medicaid, unemployment insurance, the War on Poverty, equal opportunity, aid to families with dependent children, and increased support for education.
Hand-Up Phase: The hand-up phase began with Ronald Reagan’s taking office in 1981 and declaring: “In this present crisis, government is not the solution to our problem; government is the problem.” For the next 20 years or so, the emphasis was placed on personal responsibility and “shrinking the beast.” The key talking points from this period came from Newt Gingrich and the Contract with America; the signature piece of legislation was welfare reform which put “able-bodied” recipients to work; and Republican and Democratic administrations alike focused on cutting the size of government and reducing the scope of social services.
Hands-Off Phase: 9/11, the Bush administration’s “compassionate conservatism” approach, and the great recession provided a brief interregnum between the hand-up and the hands-off phase — as did the first two years of the Obama administration. Because the Democrats enjoyed a substantial majority in both the house and Senate, they were able to pass “Obamacare” and an economic stimulus package without real bipartisan support.
The Republicans were already advocating “hands-off” in 2008 but their hands were tied. Then, along came the Tea Party and the electoral landslide of 2010, which gave the Republicans definitive control of the House and hands-off became a way of life. This is attested to by the fact that the 112th Congress passed a mere 220 laws in comparison to more than 900 laws passed by the 80th Congress, which President Truman called the “Do Nothing Congress.”
This failure to legislate, combined with the virtually singular focus on the governmental debt and deficit, has pushed the social contract to the outer edge of the radar screen for many elected Republican legislators — especially in the House.
The extent to which the debt and deficit dominates the perspective there can be captured by two votes. The first was on the so-called fiscal cliff bill which among things made the Bush era tax cuts for the middle class permanent and extended unemployment benefits. The bill passed the Senate with overwhelming bi-partisan support and got some Republican support in the House with 85 voting for but 151 Republicans voting against it.
The second was the $50 billion relief bill for those communities and areas impacted by Hurricane Sandy, which the House approved on January 15 after several hours of contentious debate. The bill passed by a 241-180 vote with 179 Republicans voting against it and only 49 voting for it.
These votes should not be viewed as isolated instance but as indicative of the divergent public opinion on the country’s social safety net. As Bruce Stokes, director of global economic attitudes at the Pew Research Center points out in an excellent paper for the New America Foundation, our attitudes on the social contract are changing and “the current debate over debt reduction reflect American’s conflicted, partisan, and often contradictory views on fairness, inequality, the role and responsibility of government and individuals in society and the efficacy of government action.”
Some key findings from Stokes paper include the following:
- Overall, public support for the “social safety net” has declined from 69 percent in 2007 to 59 percent in 2012
- By a margin of 55 percent to 39 percent, voters in the 2012 election exit polls felt the U.S. economic system generally favors the wealthy. Only the Mitt Romney supporter (63 percent) felt the system was fair to most Americans.
- There is across the board support for existing universal entitlement programs (e.g., Medicare, Medicaid and Unemployment Insurance).
- There is significantly divided support on programs for the poor. In 2012, just 40 percent of Republicans felt that government had the responsibility “to take care of those who can’t take care of themselves”. That’s down 18 points since 2007 and 22 points since Ronald Reagan’s second terms. In contrast, the view of Democrats has stayed relatively constant over time at about 75 percent.
- In early December 2012, nearly three-quarters (74 percent) of Americans felt the deficit should be reduced through a combination of spending cuts and tax increases. There were “substantial partisan differences” over the nature of the cuts. Republicans were about twice as likely as Democrats to support cuts in programs that help low income people. Republicans are divided over whether to gradually raise the age for social security as opposed to 67 percent of Democrats who disapprove of any age adjustment.
So, in spite of a general shift in the public policy-making arena from hands-on to hands-off, the public opinion on whether to be hands-on, offer a hand-up, or be hands off varies by party affiliation, the type of program, and the group or person getting assistance. This creates a decision-making conundrum and explains why the debt reduction axe could fall most heavily on domestic programs for those most at risk.
Stokes notes this in the conclusion to his paper when he writes:
“…in the effort to curtail the U.S. government debt, the support provided to the average Americans who are unemployed, poor, or in need of health insurance and pensions may be further reduced. Americans oppose such cuts in social services. But they also oppose most other efforts to reduce the debt, while supporting debt reduction in principle.”
The public’s opinion must be factored into account in the debt and deficit debate. So, too, must the evidence. And, that evidence is inescapable. America is rapidly becoming a nation where inequality of all types is on the increase and opportunity is on the decrease — especially for those on the lower and middle rungs of the economic ladder.
There have been numerous studies documenting the rising income inequality in the United States. Between 1983 and 2010, the richest 1 percent of households accounted for 38.3 percent of all growth in household wealth. For the bottom 60 percent, their wealth has actually declined during that same time frame.
A National Research Council/Institute of Medicine report revealed that there is also significant health inequality for Americans under 50 compared to those in other affluent countries. This is true for all but especially so for minorities and the poor.
Finally, an important Brookings Institution study on “Pathways to the Middle Class” found that “Children born into middle income families have a roughly equal chance of moving up or down once they become adults, but those born into rich or poor families have a high probability of remaining rich or poor as adults.”
A large percentage of citizens in the United States today are economically challenged. The past decades have been extremely difficult ones for middle income and working class individuals. Many seniors only source of revenue is social security. Social mobility is less possible than in the past.
There is no doubt about the need for deficit and debt reduction. But, that reduction must be done in a manner that keeps all hands on board rather than throwing those with the least influence overboard. This will require trade-offs among varying interest groups and priorities.
Government should not and cannot solve all problems. But, government does have a pivotal role to play in ensuring a social contract for the nation that maintains the promise of America and the American dream for all.
All options should be on the table as part of the debt and deficit negotiations. Hands-off should not be an option, however, in the social contract debate.