President Biden is set to sign off on what is arguably the biggest expansion in the welfare state since Lyndon Johnson’s Great Society. And if the past is a prologue, the Liberals are ready to take credit for all the positive trend lines that follow implementation, whether the credit is right or not.
Even the Biden administration has come to recognize that its Covid-19 relief plan – the “most progressive piece of legislation in history,” boasted White House press secretary Jen Psaki the other day. – has little to do directly with Covid. The Journal reports that only $ 50 billion, or 2.6% of the price of $ 1.9 trillion, is spent on testing and contact tracing, and only $ 16 billion is earmarked for vaccine distribution. Most of the rest consist of state bailouts, student debt relief, and various income redistribution programs involving tax credits, health insurance subsidies, and unemployment benefits.
Likewise, the ambitions of the Great Society extended well beyond the war on poverty and included programs designed to address racial injustice, healthcare, immigration and environmental conservation. . Today’s Liberals also share with their forerunners of the 1960s the unwavering belief that government is best placed to help the underprivileged. The objective is to widen the conditions of eligibility for public aid as much as possible and then to ask as little as possible of the recipients in return.
Johnson’s stated goal was to reduce dependency, not simply redistribute wealth to the poor. “The days of unemployment in our country are numbered,” he declared in 1964. Alas, the opposite has happened. After the implementation of its anti-poverty programs, the proportion of people who depended on government aid to stay above the poverty line increased, a sharp reversal of the pre-Great Society trend.
Poverty rates at the time tell a similar story. It’s true that deprivation fell under Johnson in the 1960s, but it had already been happening for over a decade before his war on poverty began. The poverty rate was around 30% in 1950, but had fallen to 18% by 1964. Moreover, as researcher Charles Murray detailed in his landmark “Losing Ground” study, the poverty rate would start to rise. in the 1970s, after two decades. decline, and even as Johnson’s successors spent more and more money on creating new anti-poverty programs or expanding existing ones.
“The truth [inflation-adjusted] the annual expenditures of the 1970s were much larger – by several orders of magnitude, for some programs – than the expenditures of the 1960s, ”Murray wrote. Yet “the number of people living in poverty has stopped declining at the same time when the budgets of public assistance programs and the rate of increase of these budgets were the highest.”
This story will not sway ideologues who believe in cradle-to-grave rights, or politicians who believe that spending money, even in a counterproductive way, is the way to win elections. But the experience of the ’60s should help temper expectations for the rest of us. And that should give some thought to Republicans and conservative thinkers who now argue that GOP-style government interventions – in the form of a higher minimum wage, tax credits, or a guaranteed basic income – will work in some way. so better than the Democratic versions. We’ve come some distance down this road already, and the laws of economics don’t care which party you belong to.
History shows that no government program has been able to match what people can do for themselves, and this also applies to some of the most historically marginalized groups in society. No Great Society program has ever been able to match the pace of progress made by blacks – in terms of poverty reduction, income, home ownership or other measures – before the implementation of this program. Instead of helping, welfare state expansions too often become decoys and traps, inflicting damage that can last for generations.
Democrats insist the so-called stimulus is needed to help unemployed people find work, but what working parents need most are schools reopening, and what is holding businesses back, what are foreclosure rules that keep potential customers away. The Liberals say the relief checks will give people money to spend. But the personal savings rate in 2020 was the highest in 50 years, suggesting that consumers already have money to spend but few places to spend it until the economy fully reopens.
It is quite possible that in a year, if not sooner, the US economy will be booming, children will return to school, parents will return to work, and the virus will be under control. Democrats will cite Covid’s inflated relief package as the reason. But the country was already experiencing generational lows in poverty and unemployment before the pandemic, and wages were rising the fastest for the working class. A lot of people may not remember what was going on in the 1960s, but Democrats are hoping they won’t remember 2019.
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