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Unleashing Growth and Innovation to Move Beyond the Welfare State

Unleashing Growth and Innovation to Move Beyond the Welfare State

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Published by Newt2012HQ
Newt Gingrich lays out his detailed vision of how we can fundamentally move beyond the welfare state through growth and innovation
Newt Gingrich lays out his detailed vision of how we can fundamentally move beyond the welfare state through growth and innovation

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Categories:Types, Research
Published by: Newt2012HQ on Nov 21, 2011
Copyright:Attribution Non-commercial


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 (Paid for by NEWT 2012)
11/21/2011(Senior Editor: Peter Ferrara)NEWT 2012
Unleashing Growth and Innovation to Move Beyond theWelfare State
NEWT 2012 Position Paper SupportingItem No. 4 of the 21
Century Contract with America
“[With a personal account system implemented], the Socia
l Security program wouldbe expected to be solvent and to meet its benefit obligations throughout the long-
range period 2003 through 2077 and beyond.”
-Chief Actuary of Social Security
…one of the things that I am absolutely convinced of is that 
we have to have work 
as a centerpiece of any social policy.”
-Barack Obama (2008)
f Social Security was shifted to a fully funded system like personal accounts, theconcentration of wealth in America would be reduced by half."
-Peter Ferrara
Today we are faced with three starkly diverging paths as we address ourentitlements crisis, the problems in our health care system, and the suffering of thetens of millions of Americans who live below the poverty line.The first path
is the “Fantasy” option:
Pretend that everything is working just fine, and that fundamental change is unnecessary. Proponents of this optionmaintain that Social Security and Medicare will function indefinitely, ignoring that both systems will be insolvent within a matter of years. They favor maintaining thecurrent bureaucratic maze of means-tested welfare programs for low-income
(Paid for by NEWT 2012)
11/21/2011(Senior Editor: Peter Ferrara)NEWT 2012
Americans, even though the
“welfare empire” has actually ended up keeping more
Americans in poverty and only intensified and institutionalized inequality.The second
path is the “Austerity” option: Conceding that we
will not becomeas prosperous and secure as we once thought we would, so we should be preparedto settle for less. This means cuts in Social Security benefits, heavier regulation andrationing in health care, and resignation that poverty will forever be a permanent facet of American life.The third path is what this paper will address: securing Americans
 retirement, expanding world-class healthcare for everyone, and lifting millions of Americans out of poverty through growth and innovation.The current system is broken: Schools do not adequately prepare youngAmericansfor adulthood and the workforce. Americans pay into Social Security theirentire lifetimes to receive dismal, inadequate returns. Medicare dramatically limitsoptions for retired Americans. And the welfare empire that has grown since the1960s isthe greatest engine of inequality of all, trapping millions of Americans in acycle of poverty.There is a better way. We must fundamentally move beyond the welfare statethrough growth and innovation.Growth and innovation means securing and strengthening Social Security byempowering Americans to invest in personal savings accounts. This gives Americansownership over their retirement and the opportunity to unleash the power of themarket to have prosperous retirements beyond their most optimistic expectations,while also wiping out all future liabilities in the system.Growth and innovation means liberating the poor from the trap of theWelfare Empire through new programs that are tailored to local communities,that promote work and that incentivize lifelong study. Building on the success of the1996 welfare reforms, block-granting all federal means tested welfare programsback to the stateswould help millions move from dependency to prosperity whilesaving taxpayerstrillions.Growth and innovation means rejecting the centralized control and rationingof Obamacare, and creating a broad Patient Power system. When patients areempowered and information is transparent, the cost of healthcare will go down forall, while the quality will go up.This paper will outline a dramatic departure from the status quo. It will behonest about the failures of the current systems. But it will reject the notion that 
(Paid for by NEWT 2012)
11/21/2011(Senior Editor: Peter Ferrara)NEWT 2012
raising taxes or lowering expectations are appropriate solutions. Throughinnovation, growth, and tapping the power of market ingenuity, we will chart a newcourse to security and prosperity for Americans of all income levels.
From the years immediately following World War II until recently, federalspending as a percent of GDP has been fairly stable at around 20%. That covers aperiod approaching two-thirds of a century. This means that through all of the great debates, the political crusades, the battles between left and right, the liberal War onPoverty, the steady rise of the entitlements, and the Reagan revolution federalspending has remained as a roughly consistent share of GDP, growing no faster thanour enormously productive economy during this time.That crashing sound you hear is the collapse of this long term grandcompromise, which until recently has allowed our economy to continue to soarahead with world-leading prosperity. Official U.S. government projections haveshown for some time now that over the next 30 to 40 years federal spending as apercent of GDP will double to 40% or more. Financing that would ultimately requireat least doubling every federal tax. Add in continued state and local spendinggrowing towards 15 percent of GDP, and government in America will consume morethan half of the economy. Much more than half in the end, because under thaburden GDP growth will collapse, leaving the government share an even higherpercentage of a shrunken economy.This would fundamentally transform America into a static, low growth,socialist European-style state. America
s unprecedented prosperity andopportunity, the American Dream, would be gone. President Obama has onlyaccelerated these developments, with federal spending on our current course nowtargeted to hit 26% of GDP by 2021.The driving factors in the long-term fiscal demise of traditional Americanprosperity are the nation
s entitlement programs.The multiplying, dead weight burdens not only threaten America
s futuresolvency and prosperity, they counterproductively fail the poor, low income andsenior populations they are supposed to help, and directly contribute to America
seconomic decline today. The joint federal/state welfare empire crushes work andthe family unit among Americans whose incomes are in the bottom 20%.Obamacare, coupled with the continued mismanagement of Medicaid, and nowMedicare
which has been mangled by Obamacare
promise the destruction of theworld-leading, top quality health care that has long been fundamental to America
shigh standard of living. Obamacare in addition imposes another trillion dollars in

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