Voters went to the polls this month looking for relief from high inflation, worker shortages, rising crime, and the crisis at the border. Undoubtedly, the new Congress, a divided government, will feel pressure to address these concerns in the near term. However, Congress faces an important fork in the road it cannot ignore. Policymakers must act now to fix the country’s finances or watch the social contract dissolve for the next generation.
Our country is at a social and economic inflection point. Inflation is rising, and debt is soaring. Congress must confront the brutal fiscal reality that the nation’s health, retirement, and economic security systems for millions of people are in serious jeopardy. Debating reforms to entitlement programs and the tax code might not garner the headlines to which many policymakers have grown accustomed, but it is necessary work to ensure vital supports exist for future generations.
The costs of inaction are too high. Health insurance spending for the poor and elderly is growing at an unsustainable rate, the Social Security Trust Fund will run out within the decade, debt as a percentage of GDP is approaching crisis levels, and work and marriage disincentives within programs for the poor are undermining upward mobility. If the federal government’s answer is to expand programs even more and raise revenue through higher taxes, economic stagnation and government dependency will be the result.
AMERICA’S HOUSING SHORTAGE IS OUR BIGGEST POLITICAL PROBLEM
As grave as this message is, conservative policies offer the best chance to fix these problems. That’s why, over the past year, former House Speaker Paul Ryan (R-WI) and I brought together a group of scholars with expertise on these issues to offer solutions in a new conservative policy plan: American Renewal. We confront the reality that the federal government must get its fiscal house in order or it risks betraying its most fundamental promises to its citizens: providing health and retirement security for the elderly, offering low-income people a path to prosperity, and educating our youth. Rather than substantiating the public’s growing list of grievances, we offer policymakers realistic solutions — ones that recognize our challenges but also stand ready to strengthen the social contract for future generations.
Conservatives can recognize the role of the federal government in providing health and retirement security for older people, a safety net for poor families, and an effective education system for children while insisting the federal government also be a good steward of public dollars. American Renewal acknowledges the importance of revenue to help the government meet its obligations, but it balances that requirement with the need to structure the tax code in a way that supports economic growth, to the benefit of all people.
When these features of the system — health and retirement security, the safety net, the education system, and the tax code — work well, all people and families can thrive, no matter their economic or demographic background. For this reason, a key priority in the coming months and years must be for Congress to address the country’s fiscal challenges and reform existing programs to ensure they remain available to future generations.
For starters, reforming Medicare to increase competition between health insurance plans and care providers is crucial. We also need Medicaid reforms that focus the program on improving health outcomes, and Social Security changes that recognize that impending insolvency requires a shift in program goals to ensure a basic level of economic security for all retirees.
We also need to reshape the social safety net and focus programs on employment and family structure as a way to increase upward mobility, while reestablishing a larger funding role for state governments to increase their accountability. And education reforms must empower families to make educational choices for their children and ensure that parents have the flexibility they need to care for a new baby.
Nicholas Eberstadt, a preeminent political economist and demographer, wrote this observation: “A bright thread running throughout the American story — thanks in no small part to the genius in the political design of the U.S. — is the nation’s resilience in the face of setbacks and adversity.”
The public relies on this resilience during challenging times such as now, and polls show they trust Republicans more to handle the country’s economic concerns. We have provided elected officials with a playbook to help meet this responsibility.
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Angela Rachidi is the Rowe scholar and a senior fellow in poverty studies at the American Enterprise Institute. She is the co-editor with Paul Ryan of American Renewal: A Conservative Plan to Strengthen the Social Contract and Save the Country’s Finances, published Nov.17, 2022, by the American Enterprise Institute.
