3.5 Trillion Ways to Lose Your Country

In July, Senate majority leader Chuck Schumer announced that Senate Democrats had agreed to expand federal spending by $3.5 trillion over the coming years. This is the “top line,” an overall total. Hundreds of details, including the number of years over which the expansion will take place, remain for congressional committees to work out. The priorities publicly stated so far include: adding vision, dental, and hearing benefits to Medicare; expanding daycare; making permanent the child tax credit incorporated into the 2021 Covid relief bill; free community college; and committing hundreds of billions of dollars to clean energy programs.

The political math will be especially challenging because Democrats intend to pass this legislation through “budget reconciliation,” which requires only simple majorities in each house of Congress. With three seats currently vacant, there are 220 Democrats and 212 Republicans in the House of Representatives, while Democratic Vice President Kamala Harris would break tie votes in the Senate, now divided 50–50 between the two parties. As a result, Democrats can pass a reconciliation bill without a single Republican vote, as it appears they will have to.

But this also means that they can afford no more than three Democratic defectors in the House, and zero in the Senate. Whatever plan finally emerges will pass only if it is acceptable to Democrats at every point on the party’s ideological spectrum. Already, Arizona senator Kyrsten Sinema has announced that she considers the $3.5 trillion figure excessive, causing focus to shift to a $1 trillion bipartisan bill for “hard” infrastructure, such as roads and bridges. “I thought there was agreement among Democrats,” Massachusetts senator Elizabeth Warren said in response, “but evidently not.”

Democrats came to power in 2020 on what Mickey Kaus calls “a wave of world-historic braggadocio” about expanding the Supreme Court and adding new states to lock in their party’s political advantages for decades. As Democratic leaders contend with the reality of congressional majorities smaller than they were expecting last fall, these grandiose plans have been shelved. Since spending more money is the biggest possibility still attainable, Democrats are proceeding as though failure is not an option.

Nevertheless, it remains a possibility, though a small one. As the New York Times reported, even “moderate” Democrats, like Sinema and West Virginia’s Joe Manchin, “have expressed relatively little consternation over the scope of the budget’s spending ambitions, at least publicly.” Whatever else they may disagree about, Democrats have for a century united in favor of more spending by activist government. Only the rationale changes. In the Depression, the argument for the New Deal was that widespread economic deprivation was bad in itself, but also a threat to the survival of democracy. “People who are hungry and out of a job are the stuff of which dictatorships are made,” Franklin Roosevelt warned in 1944, while America was at war with a German dictator who had come to power after an economic crisis.

Twenty years after the war, during an unprecedented economic boom, the argument for the Great Society was that the anomaly of poverty amidst widespread and growing prosperity made it especially feasible, and therefore especially urgent, to lift up those Americans who had been left behind. The liberal New Republic argued in 1964, “With all this wealth we can afford to try.” Try what? Well, just about anything someone thought the government out to be doing. As Lyndon Johnson said during that year’s presidential campaign, “We’re in favor of a lot of things and we’re against mighty few.”

After Johnson’s crushing defeat of Barry Goldwater, Democrats expected that the “affluent society” would continue indefinitely, generating a “fiscal dividend” that sustained the endless expansion of government spending on social welfare. Instead, the past half-century has been, for Democrats, an era of bitter disappointment and mounting frustration. From the beginning of FDR’s presidency in 1933 to the end of LBJ’s in 1969, Democrats held simultaneous control of the House, Senate, and presidency for 26 of 36 years. Over the 52 years between the 1968 and the 2020 elections, however, Democrats have enjoyed this same trifecta for a mere eight years: Jimmy Carter’s four-year term, then the first two years of Bill Clinton’s presidency, and finally the first two years of Barack Obama’s. These evanescent opportunities proved insufficient for Democrats to accomplish Big Things that can stand beside Roosevelt and Johnson’s achievements. Passing the Affordable Care Act, “Obamacare,” in 2010 is the shiniest trophy on the shelf, but over the past decade, progressive Democrats have been increasingly vocal in dismissing Obamacare as a squandered opportunity resulting in a squalid compromise.

Democrats’ demand for bold action and big spending has, then, been building since the 29-year-old Joe Biden was first elected to the Senate in 1972. It’s not surprising that they wish to act boldly in 2021, despite their narrow congressional majorities. Liberal writers and activists have urged Biden to “restore America’s belief that government is good for people,” in the words of the New Yorker’s Margaret Talbot, by repudiating the Republican-created “climate in which scorn for the purpose and the efficacy of government dashed many Americans’ expectations that it could do much for them.” Once it became clear that the new administration was indeed committed to such a course, Talbot’s colleague John Cassidy hailed “Joe Biden’s mighty ambitions” to “remake American domestic policy in a way rarely seen outside wartime.” By Cassidy’s reckoning, for Biden to get everything he wants would mean that federal spending would account for an additional 3.5% of America’s Gross Domestic Product during each year of the coming decade, compared to the baseline of federal spending from the beginning of the 21st century to the coronavirus pandemic. The bulk of the increase will be devoted to social welfare.

The idea that government programs are routinely doing marvelous but unappreciated things presupposes that the typical citizen is oblivious, ungrateful, and utterly susceptible to baseless anti-government propaganda.

It is strange but revealing that advocates for dramatically expanding the public sector ascribe the post-Great Society political stalemate, during which federal spending stayed in a narrow range around 20% of GDP, to deficient public relations rather than deficient public policies. “The government consistently makes meaningful change in people’s lives,” complains Progressive Change Institute co-founder Stephanie Taylor, “and nobody knows it.” She cites Joe Biden, who said while serving as vice president, “We don’t go out and explain why we’re doing what we’re doing … When we have a good idea, we think it will be self-evident.” Taylor wants President Biden to create a publicist-in-chief for activist government, who would work with every federal agency to enlighten voters on “what the government is delivering for everyday Americans.”

The idea that government programs are routinely doing marvelous but unappreciated things presupposes that the typical citizen is oblivious, ungrateful, and utterly susceptible to baseless anti-government propaganda from Fox News and the GOP. There might, however, be more plausible, substantial reasons why, according to the Pew Research Center, only 2% of Americans trust the federal government to do what is right “just about always” and another 22% trust Washington “most of the time.” (In 1964 those who trusted the government always or mostly amounted to 77% of the population.) It would be uncomfortable but productive for liberal writers and Democratic politicians to entertain the possibility that our social welfare programs suffer less from low spending and bad marketing than from poor performance. From 1966 to 2019, for example, the proportion of Americans living in poverty, according to the Census Bureau, fluctuated between 10% and 15% of the population. Yet in 2019 alone the federal government spent $3.13 trillion on “Human Resources,” to use the Office of Management and Budget’s term for entitlement and social welfare programs: Social Security and all other income security programs, such as unemployment compensation and disability insurance; Medicare and all other programs to promote health, including Medicaid; all federal spending on education; and all programs for military veterans. A reasonable expectation is that a rich, economically dynamic country devoting more than two-thirds of its federal expenditures, and more than one-seventh of its GDP, to such programs, year after year, would see steady progress in reducing poverty, not chronic stagnation.

It is conceivable, then, that America’s need to spend better is more pressing than its need to spend more. The federal government’s Human Resources outlays in 2019 work out to a bit more than $9,500 for every single American, or $38,000 for a family of four. (The poverty threshold for such a family that year was $26,172.) And federal outlays do not convey the extent of America’s commitment to mitigating poverty. State and local governments devoted additional hundreds of billions of dollars to health, education, and welfare out of the $2.4 trillion they spent in 2019. Nor do these figures capture the cost of “off-the-books” government efforts to enhance economic security. Regulatory programs like minimum wage laws and the Americans with Disability Act, for example, impose significant costs for the purpose of assisting people deemed to need help, but those costs don’t show up in any governmental entity’s budget.

What would it look like for the efficacy and quality of government spending to increase, rather than the quantity to grow even faster than it has in the past? The money would, for one thing, be devoted to its best and highest uses by being directed to the people who need it most acutely. It would not, in other words, be showered over the entire income-distribution curve.

But the child tax credit, the most novel of Democrats’ current initiatives, repeats the New Deal and Great Society practice of buying political support for anti-poverty programs by extending benefits to millions of people who are nowhere near being poor. Because the tax credit in the Covid relief bill—$3,600 for each child no more than five years old, and $3,000 for each child age six through 17—is available to families that have no federal income tax liability, it is especially generous to low-income families. The liberal Center on Budget and Policy Priorities estimates that making it permanent will reduce child poverty by nearly 50%. But the price tag will be much higher than this goal requires. The tax credit remains fully available to married couples up to $150,000 per year and to single parents making $75,000. Above those levels, the benefit phases out … very slowly. A married couple with three children and an income of $500,000 could still claim a portion of the credit. Instead of such bribery, Democrats should take “Yes” for an answer: the principle that government has a duty to care for the indigent is firmly established and the voters have made clear that its repeal is neither possible nor tolerable. The task of doing the job competently remains.

In addition to means-testing, smart spending requires moving as far and as fast as possible from the reigning jumble of overlapping programs to a welfare state that looks like someone built it on purpose. Our current “system” consists of an array of programs—some federal, others with shared federal and state responsibility, like unemployment compensation and Medicaid—that fit political scientist Steven Teles’ definition of “kludgeocracy.” America, he writes, “has chosen to govern itself through more indirect and incoherent policy mechanisms than can be found in any comparable country.” The result, Annie Lowery recently argued in The Atlantic, is that “American benefit programs are, as a whole, difficult and sometimes impossible for everyday citizens to use.” The system requires that “we work as our own health-care administrators. Our own tax professionals. Our own social workers. Our own disability-law experts. Our own child-support advocates, long-term-care reps, and public-housing officials.” Bill Clinton was elected in 1992 on the promise that welfare should be a second chance, not a way of life. But making poverty a full-time job and long-term career, one requiring the cultivation of an elaborate set of skills, is highly conducive to making welfare dependency a chronic condition.

In the coming weeks, Democrats will decide how many of Joe Biden’s mighty ambitions become public policy. We might then see the consequences—political and economic—of an agenda that is mighty big, but falls conspicuously short of being mighty smart.