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Is This the End of the Welfare State?

Think Tank Transcripts:Is This the End of the Welfare State?

ANNOUNCER: 'Think Tank' has been made possible by Amgen, arecipient of the Presidential National Medal of Technology. Amgen,bringing better, healthier lives to people worldwide throughbiotechnology.

Additional funding is provided by the John M. Olin Foundation, theRandolph Foundation and the Lynde and Harry Bradley Foundation.

MR. WATTENBERG: Hello, I'm Ben Wattenberg. The Republican Senateis stirring. Liberal programs long thought to be off limits topoliticians are on the table. Some observers say that what is goingon signals the repeal of the New Deal, the death knell of the GreatSociety. Others say it's not what it seems.

Joining us to cut through the rhetoric surrounding this issue are:Robert Reischauer, former head of the Congressional Budget Officefrom 1989 to 1995 and now a senior fellow at the BrookingsInstitution; Norman Ornstein, resident scholar at the AmericanEnterprise Institute and author of the recent book, 'Intensive Care:How Congress Shapes Health Policy'; John Dilulio, professor ofpolitics and public policy at the Woodrow Wilson School at PrincetonUniversity and author of 'Fine Print,' which is an assessment of thenew Congress; and David Mason, an eight-year veteran of Capitol Hilland now vice president of the Heritage Foundation, where he recentlypublished the study, 'The Ruling Class: Inside the ImperialCongress.'

The topic before this house: Is this the end of the welfare state?This week on 'Think Tank.'

The House of Representatives, led by Newt Gingrich, actedvigorously on a variety of issues earlier this year. Now theRepublican Senate is catching up. Among the proposals on the tableare:

Turning over to the states many of the main welfare programs;cutting the growth of Medicare and giving seniors more choice;sending Medicaid back to the states; cutting corporate welfare;lowering farm subsidies; and some of President Clinton's favoriteprograms are also under the gun, such as defunding AmeriCorps, hisdomestic Peace Corps, and zeroing out Goals 2000, a favorite federaleducation program.

The Senate welfare reform bill provoked a passionate response.

SEN. PATRICK MOYNIHAN (D-NY): (From videotape.) I had no idea, Mr.President, how profound what used to be known as liberalism wasshaken by the last election. No president, Republican or Democrat, inhistory -- well, in 60 years' history -- would have dreamed ofagreeing to the repeal of Title IV.A. of the Social Security Act, theprovision of the national government for children. I cannotunderstand how this could be happening. It has never happened before.

MR. WATTENBERG: Senator Moynihan is right. The welfare reform billis unprecedented. But -- but -- three-fourths of the Democraticsenators joined with Republicans in 87-to 12 vote in favor of welfarereform, and President Clinton says he supports it.

First question. Bob Reischauer, let's begin with you. You wereserving at the Congressional Budget Office until earlier this year.Are we seeing the end of the welfare state in America?

MR. REISCHAUER: Well, we're certainly not repealing the welfarestate. Social Security, unemployment insurance, many of theseprograms will continue. But the notion that the federal governmentwill share the risk of uncertainty for helping the poor with thestates will now be gone, and that's a big shift from policy that hasexisted since 1935.

MR. WATTENBERG: David Mason of the Heritage Foundation, are weending the welfare state?

MR. MASON: Ben, the idea of the welfare state is dead, the ideathat the government is going to take care of you cradle to grave,take care of your needs, and so on like that, but there's a lot ofquestions left about how fast it's going to decline and exactly whatthese programs are going to be replaced with. Just because the ideais dead doesn't mean the programs and the political ideology won'tlive on for a long time.

MR. WATTENBERG: John Dilulio.

MR. DILULIO: I don't think we're repealing anything.

MR. WATTENBERG: (Laughs.) Well, let's go home.

MR. DILULIO: Let's go home. I think Republicans can talk aboutdevolution and de-entitling and deregulating all they want.

MR. WATTENBERG: Devolution is sending it back to the states.

MR. DILULIO: Sending it back to the states. The fact of the matteris that most Americans continue to believe that government, includingthe federal government, has a substantial role to play in making thelives of ordinary citizens better. That's why a majority say they'drather preserve Medicare and Medicaid and Social Security and collegeloans rather than balance the budget, if it came down to a choice.

So this is about pumping brakes, it's not about slamming on thebrakes.

MR. WATTENBERG: Norman Ornstein, American Enterprise Institute.Sir.

MR. ORNSTEIN: Gee, I agree with all my colleagues. We're probablyin the midst of taking two steps forward and then we'll take one stepback. Americans believe things haven't been working.

MR. WATTENBERG: Or two steps backward and one step forward.

MR. ORNSTEIN: Well, maybe just dancing around, too. Americansbelieve things haven't been working. And clearly, it's not going tobe the same as it was in our attitudes towards government or the wayin which we approach problems now or in the next several years.

But the idea that we are going to have a complete reversal, thatthis vision that Speaker Gingrich has of the opportunity society withgovernment playing the most minimal role is long into the future, ifthere at all. And as John suggested, Americans want it to work, andif that involves a substantial role for government, and Americansbelieve it will, then they're going to want it. And if what we do issend things back to the states and it doesn't work, they're going tosay, All right, you're out of there, we'll bring in some people whocan make it work.

MR. WATTENBERG: David Mason, let me ask you a question. You saidthat the idea of the Great Society and the New Deal and the welfarestate is gone. And yet your major conservative politicians in Americaare the number one promoters of the flagship programs of the New Dealand the Great Society. I mean, they all say, We're taking SocialSecurity off the table because, quotes, Gingrich, 'It is sacred.'

They are saying they are going to save Medicare. It's thoseirresponsible Democrats who are really going to bankrupt thiswonderful Lyndon Johnson program, and we -- these conservativeRepublicans -- we will save your Medicare, dear Mr. and Mrs. elderlyAmerican.

Now, there is a disconnect there. Either the leaders are lying orwhat you're saying isn't right.

MR. MASON: Well, there's a distinction, first, between the NewDeal programs that fundamentally worked pretty well and need someadjustment and a lot of the things that came in the Great Society,the kind of welfare idea. And we're changing the latter prettyrapidly and readjusting the former.

MR. WATTENBERG: Medicare came in the Great Society.

MR. MASON: Medicare came in the Great Society. But everybodyagrees that needs to be changed. Bill Clinton says it needs to bechanged, the Republicans it needs to be changed. Bill Clinton'sMedicare trustees say if we don't fix the program, we've got bigproblems. And so that's an area where there's a substantial amount ofagreement.

But back on welfare, Pat Moynihan agrees the program is broken andit doesn't work; Bill Clinton won't defend it. As you pointed out,the majority of senators voted for those reforms. So there's no onewho believes the current program works. What the Republicans aresaying is, We don't know the perfect answer to fix it, and so we'regoing to send it back to the states and give them a try.

MR. WATTENBERG: So you are saying, in effect, that selectively,the New Deal and the Great Society and big government liberalism,selectively it is being phased out.

MR. MASON: Well, and some of these programs work better thanothers, some of them are more efficient than others. And the welfareprograms in particular, people have come to the conclusion arepernicious, they don't work. And there are a lot of things aboutMedicare that don't work and we're going to have to fix those, thoughprobably more slowly.


MR. REISCHAUER: What we're doing is making rather radical changesin the programs that affect low-income people. Low-income peoplearen't going to go away as a result of these reductions in resources.And I agree with Norm, to the extent that states can't solve theseproblems because they don't have the resources, they don't have thepolitical will, this will be bounced back up to the federal levelfairly soon, after the first major recession probably.

MR. ORNSTEIN: Let me get to the question that you asked Dave. Ithink we all have to agree that there is some disingenuousness hereon the part of some of the Republican leaders, who want to phase outas much as they can of the New Deal and the Great Society.

Many of them talk in other occasions about how Social Securityought not to be there; we ought to be moving towards a very differentkind of program. It ought to be privatized, people ought to be ableto take their money and put it into retirement accounts and managethem more. They'd prefer not to have a Medicare program, to have itmuch more of a private system, to have the reforms that they'retaking in modest steps, medical savings accounts, for example, andhave them ultimately supplant the existing Medicare program.

When they talk about sending things out to the states, for manythat's as a way station to send them out of government entirely. Andthis is a tactical step. Talking about saving Medicare is as much asanything a tactical step because they don't want to have thegovernment be basically the prime mover here.

MR. MASON: I agree with you except your allegation that this isdisingenuous or that people are trying to fool. You're right, they'retaking a lot of small steps in the direction of some major reforms. Ithink that's a great thing, and in fact, as you said, they've laidout where they want to go.

Now, the public may not be sure that's going to work, and so Ithink it's a perfectly acceptable intermediate step to say we'regoing to go a little bit in that direction.

MR. DILULIO: I think the interesting thing is that even if we takewhat Republicans are saying at face value, what exactly are theypromising to do? They're promising to make these massive cuts inMedicare and Medicaid and welfare and de-entitling it, and at the endof the rainbow, there is what? A balanced budget. A budget balancedat what, a federal establishment that will represent still about $1.6trillion.

I mean, going back to the question you asked at the beginning, Ithink if you had the opponents, the conservative opponents of the NewDeal here and they were looking at this, this is going to be theconservative nirvana. We're going to stand pat at a federalestablishment that is involved in environmental and crime and still arole in housing and welfare, and this is the great conservativerevolution --

MR. WATTENBERG: But John, I think the case the conservatives aremaking, you know the old metaphor of the ship of state being in afact a ship, a great ocean liner. You don't make U-turns or sharpright turns or sharp left turns, but once you move the nose of thatocean liner a degree or and then another degree or two, pretty soonyou're -- and that's what you're talking about.

MR. MASON: And among conservatives, for instance, there is somedisappointment now, and understandably so, that we haven't done morealready. But the question is, is this the first of two years or thefirst of 20 years? And if this is the first of 20, then we're goingto have some very significant changes further down the road.

MR. DILULIO: The bet that I'm making is that this is -- there'sgoing to be feedback from this, as Norm and Bob suggested. Two tothree years down the road, after we have the first recession, whatyou're going to have is people saying, Hmm, there are some realsevere problems here that aren't being addressed. Who's responsiblefor that? Whose fault is it?

I think at that point, I don't say we're ever going to go back towhat we've had, in particular on welfare. It's one thing to agreethat welfare has had perverse and unintended consequences. Everybodyagrees with that, all points of the political spectrum just about.It's quite another thing to say that the answer to that is tode-entitle welfare and send it back to the states.

MR. ORNSTEIN: You've got a couple of interesting themes in thisrevolution. One is aimed at poor people and aimed largely at culture.And what you focused on with welfare is the illegitimacy question,but of course the main question that we focused on with welfarebefore is, is it a disincentive to work? And what we're going to tryto do is provide incentives for people to work. We want welfare to bea work-fare kind of program, and it is a springboard to work.

But if you look at the panoply of programs that we're pursuinghere, the incentives that we've tried to build into the system toencourage people to move off welfare and on to work are now being cutback as well. And we're going to see a squeeze here.

MR. WATTENBERG: But they haven't worked, Norman. They haven't. Thenumbers of people on welfare have gone up while those numbers ofprograms have gone up.

MR. ORNSTEIN: We have a significant squeeze here that is going tocome with tax increases for lower-income working people even asyou're pushing people off of welfare, and it's going to provide Ithink some feedback that's going to be negative.

MR. WATTENBERG: Let's go to a better place, to a higher level. Inthe 1960s and I guess up through the early 1970s, there was a wordthat always struck me when you went to these internationalconferences. People said that the growth of the welfare state --welfare in that context meaning not just as we call it welfare, butthis whole panoply of supports that keep people through theirgovernment in pretty good shape -- they said that the growth of thewelfare state is 'inexorable.' That was the word that always used tohaunt me. I said, you know, these are people living in democracies;the whole idea of democracy is that nothing is inexorable unless youhave the sovereign people behind it saying that's the way we want togo.

Three of you -- John Dilulio, Robert Reischauer and NormanOrnstein, without using that word, are saying -- what I am hearing isinexorable: Here we have this system, you can tickle it a little bit,you can tweak it a little bit, you can do something with welfare --Bob Reischauer says, hey, it's going to come right back to you;you're going to be doing the same old thing again.

Are you people status-quo-niks? Is that what you're talking about,that you can't move the ship? I mean, what are we doing inside thebeltway here if we don't have some democratic ability to changethings, seriously?

MR. REISCHAUER: Well, remember, the welfare state is largelyredistributing resources among the middle class. It's largelypensions for the elderly, health care for the elderly. And there isno them versus us in this. It's society deciding that certain thingsshould be collectivized: We should make sure that people do saveenough for retirement, so we set up a program to do that. Health careis a tremendous cost. People, given their retirement incomes, can'tpay for it. We should develop some collective way of resolving thatissue. The problems aren't going to go away and I think that -- MR.WATTENBERG: People say that -- look, I mean there are the middleclass -- you made the point, there are these middle-classentitlements and there are the lower-class entitlements. People havemade the case that the entitlements going to the poor have created adependency crisis in this country that have made poor people -- haveincreased crime, have broken up our education system. And you'resaying -- I mean, is that your point there also, well, there's sortof nothing we can do about it?

MR. REISCHAUER: No, I'm not talking about those --

MR. WATTENBERG: It is much worse than it used to be.

MR. REISCHAUER: I'm not talking about those programs at all. I'msaying, when we talk about the welfare state, make no mistake aboutit. Two-thirds, three-quarters of it isn't the money going tolow-income poor people, dysfunctional people. It's --

MR. WATTENBERG: No, but don't measure everything in dollar signs.I mean, it may be only one-third are going to poor people, but thatis causing two-thirds or three-fourths of the problem in thiscountry. I mean, there is some of this, and in my ignorance aboutMedicare I would say, look, the Medicare things we're talking aboutis mostly it's costing too much, let's cut it here. That's fine.That's an interclass redistribution.

Some of the things about poor people in this country are a majorideological, philosophical difference.

MR. REISCHAUER: But I think it would be wrong to say theseprograms are the result of the welfare system. They're the result ofracial discrimination, of a poor education system, of jobs thataren't available, lots of things -- and exacerbated by variousaspects of our welfare system. But if the welfare system was wipedoff the map tomorrow, these problems wouldn't go away and they'd beprobably almost as large as they are right now.

MR. WATTENBERG: Do you think you would have had a roughlyseven-fold increase in out-of-wedlock births if we didn't have amajor welfare net in this country, growing?

MR. REISCHAUER: We've seen that occur across the globe, thatincrease.

MR. WATTENBERG: Across the globe in countries with high welfare --

MR. REISCHAUER: We have also seen movie stars, lawyers, people whoare unaffected by the welfare system have children out of wedlock.There's been a change in values in this country.

MR. WATTENBERG: But if Murphy Brown has a baby, Norman doesn'thave to pay for it, Bob, I don't think.

MR. REISCHAUER: Those are cultural norms.

MR. DILULIO: But Ben, even if you change the cultural norm -- xxeven if you take -- let's not even argue about the relationshipbetween the rate of nonmarital births among AFDC recipients on theone side and welfare payments. We can spend a lot of time on that andeverybody's eyes will glaze over.

Let's assume that the diagnosis you've given is correct. Over thelast 30 or 40 years, welfare spending has had these perverseincentives. It has killed the black, two-parent, inner-city family,it has increased illegitimacy, it has had all these terribleconsequences. Let's assume that's true.

I believe that assuming that running the monetary incentives inreverse is sort of tantamount to assuming that a guy who was murdered30 years ago with a knife stuck in his chest can come along 30 yearslater, pull the knife out and expect that he's going to come dancingback to life. Okay? It doesn't make any sense.

MR. WATTENBERG: Yeah, but that is a terrible metaphor.

MR. DILULIO: I don't think so. I think it's a good one. BillBennett thinks -- even more important, Bill Bennett thinks it's agood one.

MR. WATTENBERG: Let me present you with a metaphor, which isyou're going down a road and you have a fork in the road. And youtake --

MR. ORNSTEIN: Take it.

MR. WATTENBERG: Yeah, take it, right. (Laughter.) You take thisfork, and you find a bad place and the roads are bumpy and you don'tlike it. And then you say, Hey, you know, I don't like this way, andyou go back to the fork and you go the other way. I should havereversed that left and right.

MR. DILULIO: Fine, go back and reverse it.

MR. WATTENBERG: But that's not pulling a dagger out of somebody'sheart.

MR. DILULIO: Fine. Go down the road, use what metaphor you please,run the monetary incentives in reverse, de-entitle it. But rememberthat what Senator Moynihan said is a brute social fact. This is wherethe feedback comes in. There are 40 million kids aged 10 or under inthis country today. A growing fraction of these kids, for whateverreasons, are at risk -- at risk of growing up jobless, at risk ofgrowing up drug-dependent, at risk of getting criminally victimizedand becoming criminals. They are there, and they are going to bethere no matter how you structure these programs or run them.

That is a problem that Americans are going to deal with, andthey're going to deal with it either via Washington or via thestates, but they're going to have to deal with it. And the questionintellectually is, is it going to be possible at the margin to dealwith this better than we are now if we devolve and de-entitle?

MR. WATTENBERG: All right, we have now set the stage for our onerevolutionary here. These guys are all blowing smoke as far as you'reconcerned, is that right?

MR. MASON: Look, I agree with John. Just reversing the welfarestate isn't going to solve our problems, and that's why we'reconvinced --

MR. WATTENBERG: The welfare state or this particular welfaresystem?

MR. MASON: This particular program. And that's why we're convincedthat you've got to focus on things like illegitimacy. You can't justtake away the money and think that will make it better.

But let's get to your question about inexorability. It's notinexorable. We have reached the limits of the tax collection systemto fund programs. You go to Canada -- in health care, you getrationing. You get big cuts in Britain. A lot of the same problems inthe United States. We're reaching the limits of the ability to payfor these welfare programs, particularly middle-class welfare. And sowe get caught in a cruel vice between increasing taxes or cuttingbenefits in a program like Medicare.

And what the Republicans are saying is we've got to figure out abetter way and we think we know the beginning of some answers to thebetter way. And that involves, for instance, bringing the free marketin to provide competition.

MR. ORNSTEIN: You asked the question based on the premise thegrowth of the welfare state is inexorable. Well, obviously, as thegreat thinker Herb Stein once said, things can't go on forever, andif something can't go on forever, it will stop.

And what we're seeing is --

MR. WATTENBERG: Why didn't I think of that? Yeah, right.(Laughter.)

MR. ORNSTEIN: What we're seeing is that the growth of the welfarestate is not inexorable, and we have probably come pretty close tothe limits of what we will spend as a proportion of our grossnational product in government and what we will raise. And that hasbeen relatively stable over a long period of time. Certainly whatwe've raised has, around 19 percent of our gross national product.And what happened is our spending went up to around 23, 24 percent,the growth coming -- driven largely by these entitlement programs forthe elderly. We will restrain them, that's at one level, and restraintheir growth. But they're not going away.

Now, there are some tactically who want them to go away, but knowtactically that they can't get it now, so they want to change them,bring in the market system now, and hope eventually you can phasethem out. You've got to be, I believe, skeptical of that.

Then you get these other programs which, as you suggested, are notnecessarily expensive. In a 6-, 7-trillion-dollar economy, welfare isa trivial sum of money. It is a question of what signals it sends interms of values in the society.

And while I do not -- I believe, as John suggested and as BillBennett said, that if government was a significant part of the causeof a problem, that moving down a different path, taking governmentout, will not solve that problem.

On the other hand, debating values at the governmental level insociety, changing some programs so that you can have an impact on thebroader society's values is also potentially a very good thing.

If we can get back to a point where people see that there's asense of -- there are things that are wrong, there's right andthere's wrong, which we have gotten away from, not just because ofgovernment -- when Murphy Brown has a child out of wedlock, that'ssaying to the American people nothing wrong with this. It doesn't sayonly if you can pay for it, it says there's nothing wrong in this,what used to be, you're having a child out of wedlock. Whether it's arich bastard or a poor bastard, it's still a bastard. That's nolonger a value in society, and having that debate is probably a goodthing.

Does that mean the end of the welfare state? I would suggest no.Does it mean we will no longer grow inexorably? I would suggest yes.

MR. WATTENBERG: You have moved from your FDR position to your DanQuayle position. (Laughter.)

MR. ORNSTEIN: I wouldn't use those analogies, but --

MR. WATTENBERG: Right. Bob Reischauer, is this ferment we areseeing, does it concern costs or does it concern ideology? This is apretty important question because one is sort of a mechanic's job,and the other is these guys, these outlanders from the hills comingand saying, You're doing it all wrong, the idea structure is wrong,that's why you're in trouble, that's why you have cost problems;change the ideas.

MR. REISCHAUER: From the standpoint of the vast majority ofAmericans, I think this is a cost problem. From the standpoint of asmaller group of ideologues, it's a matter of principle, it's amatter of ideas, that government is trying to do too much and it isdoing what it does the wrong way. And they've come together in thiseffort to balance the budget, and they've come together at a timewhen the opposition is particularly weak, where the opposition has,quite frankly, fallen flat on its face on a number of fronts.

MR. WATTENBERG: The Democrats.

MR. REISCHAUER: The Democrats. And whether this coalition isviable over the long run and is viable as the implications of thesecutbacks become felt by the average American, I think is a very openquestion at this point.

MR. WATTENBERG: Last word to David Mason because you areoutnumbered. Is it cost or ideology?

MR. MASON: Well, it's getting the ideas right. I actually disagreeabout the cost of the welfare system. I think it costs tremendouslytoo much, but I think the touchstone of this is the government is toobig and it does too much. And people are convinced that that initself is a problem. Even if we could save money on the margin,getting the government out isn't by itself going to reinvigorate ourcommunities, but I think it's a necessary first step because in a lotof ways, the voluntary organizations, the neighborhood organizationsare sort of smothered by the heavy hand of government, and we need toget that off. And even if that means some uncertainty as to whatcomes in to replace it, we've got to do that if we want ourcommunities to work again.

MR. WATTENBERG: Okay. Thank you, John Dilulio, Robert Reischauer,David Mason, and Norman Ornstein.

And thank you. Please send your comments to: New River Media, 115017th Street, NW, Suite 1050, Washington, DC, 20036. Or we can bereached via e-mail at thinktv@aol.com, or on the World Wide Web atwww.thinktank.com.

For 'Think Tank,' I'm Ben Wattenberg.

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