Two huge domestic policy battles are now underway that will transform the social contract in ways that will have enormous consequences for the American experiment far into this and probably the next century. One, the President’s push to repair the Social Security system, has been given high visibility and top domestic priority in his second term; the other, health care reform, is also high on his list, if not quite so visibly at present. Both of these issues involve the same philosophical conflicts and divergent worldviews that seem to drive much of our domestic policy—more government or more individual responsibility, more socialism or more capitalism, more market-based allocation of resources or more top-down one-size-fits-all solutions. Writing in the January/February 2005 issue of Foreign Policy, Kenneth Rogoff notes that “the next great battle between socialism and capitalism will be waged over human health”. I agree, and I would add the Social Security system to his prognosis. In both cases, the question is not if government will have a role, for, as Rogoff suggests, the case for some government intervention and regulation in both policy areas is compelling on the fairly well settled grounds of efficiency and moral justice (I would add, much more settled as to the latter than the former), but the issue is precisely how much redistribution of income and government intervention is warranted.
At the heart of both issues is the fact that they are central to America’s “entitlement mentality”, in the case of Social Security because of a particular promise made in another world seventy years ago, and for health care because of the employer-based finance system, which was an expedient also devised for another world and different time. Both of these commitments have become deeply embedded in the social contract, but they should be revisited and significantly revised. Many of the solutions being floated are variations of a theme that involves better use of government, on the theory that the public good can be better (or only) served through public sector direction and oversight, while the focus should be on empowerment—how to reverse this entitlement mentality and get many more individuals involved in and committed to personal responsibility for their personal and family welfare. There is a wide gulf between the “entitlement society” and “ownership society” mentalities. President Bush understands this, and I also think he knows that the old paradigm will die hard and not without a huge fight. In fact, his prescription for solutions in both cases would, over time, completely transform the dynamics of the welfare state, which the left cannot abide. But it’s a fight worth having now, for the sake of our economic viability and, more importantly, for the sake of our experiment in self-government.