AN OP-ED BY RICHARD GELLES
_ Insanity is doing the
same thing over and over again but expecting different results. There
is some debate as to whom to attribute the first use of this
quote—Albert Einstein, Benjamin Franklin, author
Rita Mae Brown, or even an old Chinese proverb. But no matter who
first uttered these words, the quote is an accurate critique of
government efforts to address the current economic crisis in the United
States. Neither conservatives nor liberals are distinguishing
themselves in the current policy debate. Liberals are doing an
excellent job of living up to the definition of insanity by conjuring up
more ways to spend more money on exactly the same problems and policies
that have proven to be unsuccessful for decades.
Conservatives’ knee-jerk response to economic crises is to lower taxes
and slash and burn funding for social programs. But to target Social
Security and Medicare for cuts is another version of insanity, since
Social Security and Medicare are two of but a
pitifully small number of government programs that have actually worked
to help people.
In my book, The Third Lie: Why Government Programs Do Not Work—And a Blueprint for Change, I begin with an old joke that there are three lies: (1) Of course I will respect you in the morning; (2) The Check is in the mail; and, (3) I’m From the government and I’m here to help you. Unfortunately, the three lies joke is told to willing ears and has sufficient evidence to support the premise of the joke—government programs really do not seem to offer much real help.
With no job growth and on the cusp of another recession, the third lie joke is not really funny anymore. The ongoing government gridlock is frustrating, not because it seems government is unable to do anything, but because none of the proposals from either side would actually work to create jobs or improve the economy.
Critiquing the failure of government efforts to help was the easiest task of writing The Third Lie. (Of course stating that Head Start is not an effective program will cost me friends in my academically liberal circles.) The more difficult effort was to identify government efforts to help that were actually effective both in terms of helping and cost effectiveness. Social Security and Medicare met both criteria. Some people would object to labeling Social Security as “effective.” The short rebuttal is that Social Security has drastically reduced poverty among those of 65 years of age and would be financially solvent if government had not plundered the trust fund to pay of other ineffective programs. Medicare has improved the health of those over 65 and is a remarkably efficient government programs. The administrative costs of Medicate Part A are less than 2% of total expenditures. If there is a problem with Medicare, it is the allocation of health care by the providers, not the program itself.
A third successful government program was the GI Bill of 1944. Nostalgia may cloud the facts about the GI Bill, but the Bill was opposed by the Presidents of Harvard and the University of Chicago and passed in committee by a single vote. The enduring legacy of the education voucher and mortgage guarantee program was the creation of a vibrant middle class in the United States.
What to ineffective programs have in common? They are targeted or categorical program that require a bureaucracy to determine who is and it not eligible for the program. What do effective programs have in common? They are universal for a defined population, they are widely considered to be fair and the recipients of the benefits deserving, they programs are fundable, and the programs are consistent with a market economy—in other words they incentive values and behaviors consistent with our political and economic values. The most important contribution of one of the effective programs, The GI Bill, is that it led to the expansion and sustaining of the American Middle Class.
The current economic crisis is all but eviscerating the middle class. With no growth in real wages for decades, the American Middle Class sustained itself on second mortgages and credit card debt. When the credit house of cards tumbled in 2008, the poor stayed poor, the rich became slightly less rich, and the middle class collapsed.
What we need now are not cuts of effective programs or pumping more money into temporary stimulus programs, but a long-term program that reinvigorates and invests in the middle class. My proposal in The Third Lie is to build on the concept of “baby bonds” and “individual development accounts” and create a “Futures Account.” A “Futures Account” would provide $54,000 to every child when he or she turns 18 years old. The funds could either be used as a voucher to pay for education beyond high school or as a voucher towards the purchase of a home. The funds for the “Futures Account” could be achieved by a restructuring of some of the provisions of the tax code—for example eliminating the “dependent child exemption,” eliminating means tested programs that have no long term effectiveness—Head Start, and winding down programs that would not be necessary once the “Futures Account” was in place—such as Pell Grants.
Three-quarters of a trillion dollars for a universal “Futures Account,” that’s insane. No, what we are currently doing with ineffective government social programs is insane. It is time for a new idea.
In my book, The Third Lie: Why Government Programs Do Not Work—And a Blueprint for Change, I begin with an old joke that there are three lies: (1) Of course I will respect you in the morning; (2) The Check is in the mail; and, (3) I’m From the government and I’m here to help you. Unfortunately, the three lies joke is told to willing ears and has sufficient evidence to support the premise of the joke—government programs really do not seem to offer much real help.
With no job growth and on the cusp of another recession, the third lie joke is not really funny anymore. The ongoing government gridlock is frustrating, not because it seems government is unable to do anything, but because none of the proposals from either side would actually work to create jobs or improve the economy.
Critiquing the failure of government efforts to help was the easiest task of writing The Third Lie. (Of course stating that Head Start is not an effective program will cost me friends in my academically liberal circles.) The more difficult effort was to identify government efforts to help that were actually effective both in terms of helping and cost effectiveness. Social Security and Medicare met both criteria. Some people would object to labeling Social Security as “effective.” The short rebuttal is that Social Security has drastically reduced poverty among those of 65 years of age and would be financially solvent if government had not plundered the trust fund to pay of other ineffective programs. Medicare has improved the health of those over 65 and is a remarkably efficient government programs. The administrative costs of Medicate Part A are less than 2% of total expenditures. If there is a problem with Medicare, it is the allocation of health care by the providers, not the program itself.
A third successful government program was the GI Bill of 1944. Nostalgia may cloud the facts about the GI Bill, but the Bill was opposed by the Presidents of Harvard and the University of Chicago and passed in committee by a single vote. The enduring legacy of the education voucher and mortgage guarantee program was the creation of a vibrant middle class in the United States.
What to ineffective programs have in common? They are targeted or categorical program that require a bureaucracy to determine who is and it not eligible for the program. What do effective programs have in common? They are universal for a defined population, they are widely considered to be fair and the recipients of the benefits deserving, they programs are fundable, and the programs are consistent with a market economy—in other words they incentive values and behaviors consistent with our political and economic values. The most important contribution of one of the effective programs, The GI Bill, is that it led to the expansion and sustaining of the American Middle Class.
The current economic crisis is all but eviscerating the middle class. With no growth in real wages for decades, the American Middle Class sustained itself on second mortgages and credit card debt. When the credit house of cards tumbled in 2008, the poor stayed poor, the rich became slightly less rich, and the middle class collapsed.
What we need now are not cuts of effective programs or pumping more money into temporary stimulus programs, but a long-term program that reinvigorates and invests in the middle class. My proposal in The Third Lie is to build on the concept of “baby bonds” and “individual development accounts” and create a “Futures Account.” A “Futures Account” would provide $54,000 to every child when he or she turns 18 years old. The funds could either be used as a voucher to pay for education beyond high school or as a voucher towards the purchase of a home. The funds for the “Futures Account” could be achieved by a restructuring of some of the provisions of the tax code—for example eliminating the “dependent child exemption,” eliminating means tested programs that have no long term effectiveness—Head Start, and winding down programs that would not be necessary once the “Futures Account” was in place—such as Pell Grants.
Three-quarters of a trillion dollars for a universal “Futures Account,” that’s insane. No, what we are currently doing with ineffective government social programs is insane. It is time for a new idea.
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