Beyond Growth

Abby M. McCloskey

Current Issue

From the standpoint of economic growth, the first two years of the Trump administration have been some of the strongest in recent memory. The president has pursued aggressive regulatory reform, instituting a requirement that two regulations must be eliminated for every new regulation issued. The administration also successfully worked with Congress to pass tax reform, lowering the tax burden on businesses and individuals by $1.5 trillion in the next decade. While projections vary, the Joint Committee on Taxation estimated that the tax law would boost GDP growth by 0.8% over the next decade — a significant increase for an economy averaging 2% growth since the Great Recession. The White House's Council of Economic Advisers offered an even rosier view, estimating that tax reform could increase annual GDP growth to anywhere from 3% to 5%.

Sure enough, estimates for annual economic growth in 2018 are on track to be 3% — the highest it's been since 2005. The unemployment rate is the lowest it's been since 2000; the stock market hit record highs; and our national GDP has surpassed $20 trillion — the first economy in the history of the world to do so.

The administration's efforts to boost economic growth through tax cuts and deregulatory action have revealed two things. First, the weak economy during the Obama years was not the inevitable result of a debilitating financial crisis or the beginning of a new normal of negligible growth (commonly known as "secular stagnation"). It was at least in part the result of poor policy choices: excessive regulation, massive legislation, and executive orders that cost jobs, held down wages, and created significant uncertainty. The pages of the Federal Register, a proxy for the U.S. regulatory burden, increased to record lengths during the Obama administration. The National Federation of Independent Business's Small Business Optimism Index — at historically low levels from 2009 to 2016, largely due to tax and regulatory concerns — skyrocketed to new highs following the 2016 presidential election, and it has stayed there ever since. And in 2018, the U.S. was ranked the most competitive economy for the first time in a decade by the World Economic Forum.

But the Trump administration's economic agenda has also revealed a second and more significant point: Economic growth alone — however beneficial, however necessary — is unlikely to address some of the biggest challenges that the American economy faces in the 21st century. As Republicans tout the soaring stock market, growing economy, and low unemployment rate, their rhetoric has become disconnected from the experiences of many Americans. The GOP would do well to pay attention to its constituents, lest it find itself flat-footed come the next election.

Economic growth alone is unlikely to alleviate pressure on American workers, especially those with fewer skills. Real wages have more or less stayed flat for all but the highest earners since 1970 (though the post-tax income of families has risen through government and employee benefits). An increasingly large share of prime-age men and women have decided to leave the labor force entirely, whether it's because their jobs have been eliminated by trade or automation, or the benefits of work simply no longer outweigh the costs. To be sure, economic growth helps to boost work and wages, but the pressure on low-wage American workers has persisted for decades — through boom and bust — and is likely to continue.

Economic-growth statistics also don't capture the social decay occurring across the country and the resulting rise in hopelessness. For the first time in modern history, the mortality rates of prime-age white men and women in the U.S. are rising — a phenomenon that researchers Anne Case and Angus Deaton have attributed to "deaths of despair" due to drugs, suicide, and alcohol. Our social fabric is fraying, and people are losing a sense of purpose, dignity, and connection to one another. This too has implications for economic health. It is the strength of families and communities, not the broader economy, that is at the root of economic opportunity. Rates of upward economic mobility have barely budged in the last 40 years despite periods of growth and government investment; 70% of children born poor will never make it to the middle class. The "American Dream" is increasingly out of reach for our poorest citizens. Improving economic opportunity will thus require a deeper investment in the social fabric of our society. 

And growth alone is unable to address what is arguably the most significant long-term challenge our economy faces — the federal debt. The recently enacted tax law actually trades the long-term sustainability of the economy for short-term stimulus. Accounting for growth effects, the tax cuts will likely reduce federal revenues by $1 trillion, worsening the budget trajectory. The Congressional Budget Office projects that the federal debt will grow from 78% of GDP currently (a level surpassed only during World War II) to an unprecedented 152% by 2048. (This means that even if the entire economy were liquidated, only a part of our debts would be covered.) Economists Glenn Hubbard and Tim Kane argue that it is federal debt in combination with political impotence that brought down previous great world powers. We should not presume we are so different. 

Republicans who care about the long-term health of the economy must go beyond a growth-only agenda. If they don't, not only will some of the biggest problems facing the country remain unsolved, but the GOP may well find itself in political trouble. We are living in strange times when, despite a booming economy, socialist political figures such as Alexandria Ocasio-Cortez and Bernie Sanders are gaining in popularity by explicitly promising to overhaul the capitalist system, and when Beto O'Rourke, far-left congressman and media darling, loses his Senate race by only a hair's breadth in deep-red Texas. 

Many of the far-left's proposed solutions would be devastating in their effects on work, industry, and the federal debt. But Democrats' themes of inclusivity, fairness, and equity strike a chord because, by many measures, the gains of economic growth have not been reasonably shared — and Republicans have done little about it. In a 2016 poll, 71% of Americans said they believe the economy is rigged "in favor of certain groups," leaving many behind. Furthermore, Democrats can now claim to be the party of fiscal responsibility — even as they propose massively expensive government programs — because the pursuit of growth alone has often overlooked the country's long-term fiscal sustainability.

This must change. Conservatives are right to emphasize economic growth, but they must go further, helping to build an economy that is dynamic, inclusive, and sustainable. This will require thoughtfulness and creative approaches to strengthening communities and families at their most basic levels, as these connections are the primary sources of upward mobility and opportunity. It will require targeted investment to support American workers, above and beyond what's currently being done to help restore dignity to work and results to our education system, to make sure economic growth benefits everyone. And it will require a plan to restore fiscal balance — the most daunting challenge to both the growth and inclusivity of the economy — and to reform our entitlement system so it can better care for those in need.

What Republicans need is an economic agenda that moves beyond growth alone to promote a stronger, more inclusive economy.

INVESTING IN RELATIONSHIPS

At its most basic level, our economy will be strong and inclusive only if it's built on a foundation of close ties among families and communities. As William Buckley, Jr., wrote in his 1990 book, Gratitude, "The conservative movement perceives connections between the individual and the community beyond those that relate either to the state or to the marketplace." This conservative vision must inform a conservative economic agenda.

This is doubly important because the ties between us — the associations that comprise civic life — have been strained and torn in ways we have never seen before. Their absence is unmistakable when one logs onto social media, drives through an all-but-abandoned Midwestern downtown, or visits an overburdened childcare center. Stagnant economic opportunity, the opioid crisis, rising mortality rates, shuttered storefronts, and political polarization all find their roots in the breakdown of family, work, and community, and in our lost sense of responsibility for each other.

Helping to restore these connections is a precondition for sustaining a healthy and inclusive economy. Research shows that the family a person is born into, and the neighborhood he lives in, have a much stronger influence on his socioeconomic outcome than any other factor — more than economic growth, good-paying jobs, or government programs. The breakdown of the family consistently emerges in the research literature as the main driver of poverty and low upward mobility. Changes in family structure may explain the entire increase in poverty from the 1980s to 2004, according to a team of researchers at the University of California, Davis. Others have found that family stability is the strongest correlate of upward mobility.

Our neighborhoods, rather than serving as communities of support, can at times be the source of the problem. If a person is born in the bottom fifth of the income distribution in Atlanta, Georgia, his chances of rising to the top fifth are less than one in 20, whereas if he is born in San Jose, California, his chances rise to better than one in eight. There's something about a community — its people, its layout, its culture, its values — that affects opportunity more than the broader economy or government benefits.

Rebuilding our connections will ultimately require a cultural shift — be it faith-inspired or otherwise — to counter the rise in isolation and individualism. A person's sense of purpose, responsibility, friendship, family commitment, and decency are not things that the market or government can (or should) instill or provide.

Public policy cannot provide these either. But it can help protect and expand the space for individuals and communities to thrive. The first step is to encourage the belief that a person, or a community, has agency: agency to make another person's life better and agency to make a place better. Too many give up on their communities — or rely on a distant government agency to bring change — instead of doing the hard work of improvement themselves.

One idea for encouraging investment in communities is to incentivize charitable contributions, which are often made at the local level. Alan Viard, a tax scholar at the American Enterprise Institute, has proposed making all charitable contributions tax deductible by converting the current charitable write-off to an "above the line" deduction, so that all Americans who pay income taxes can claim it, rather than only those who itemize. This would bolster investment in communities. But it could go further than that: Viard also has proposed a cash credit for those who give to charity but have no income-tax liability. This is important because nearly half of the population has no income-tax liability, and thus does not benefit from the existing charitable tax deduction. They too should be included in such incentive programs to reinforce the point that their income does not diminish the value of their contributions to their communities. 

A congressional proposal already exists to enact this "above the line" charitable deduction; it is estimated to increase charitable giving by $21.5 billion. By incentivizing charitable giving at the community level and involving a larger share of the population, this deduction could help improve our sense of connection to and solidarity with one another. Moreover, this type of proposal reflects the conservative belief that individuals can better direct resources at the community level than remote federal bureaucrats can.

There is another proposal that could do even more to improve social cohesion, one that Buckley outlined in his book mentioned above: a voluntary national-service program. The activities would not be limited to military service but would include service in every venue, from childcare to eldercare to addiction recovery to environmental cleanup. While voluntary service is traditionally thought of as something for 18- or 19-year-olds, it could presumably be offered as a one-year program that anyone could participate in once in their lifetime for a set stipend of $30,000 or $15 an hour. The federal government would pay the stipend, or perhaps provide some other type of benefit, such as a credit for college costs, at that level. Instead of creating a large new federal agency to provide these service opportunities, citizens could partner with existing nonprofits or city-based projects. Indeed, such a program need not be a national one, but one that cities and communities could spearhead themselves.

The potential benefits of restored connection are significant. Instead of sitting on the couch and taking pain medication, as half of men who are out of work in their prime-earning years do, they could volunteer with a homeless population and reconnect with their neighbors and the local economy. Instead of retiring early, an able-bodied woman would have an incentive to volunteer at a childcare center and give back to other working mothers.

Such a program could also help with what is arguably one of our biggest work challenges, which is supporting difficult-to-employ populations. Securing a job is particularly difficult for those who've faced extended periods out of work (1.3 million Americans have been unemployed for more than six months), who carry criminal convictions (an estimated 20 million Americans are released felons and former prisoners), and who are less skilled (one in 10 Americans never complete high school, two in five have a high-school degree or less). A one-year national-service program could provide them with connections and skills to get back on their feet.

Such a program need not be tremendously expensive, though starting with a pilot would be prudent. It could be sized depending on the impact and desired expenditure. For example, should policymakers scope the program for $10 billion a year, this would allow for one in 10 high-school graduates to participate for a stipend of $30,000 or the equivalent of $15 an hour; for perspective, that's less than 4% of the cost of the employer health-care deduction.

The idea of a voluntary service program has been around for decades, but it has never been needed more than now — when Americans' connections to their families, communities, and work are in tatters and isolation is on the rise. Such a service program could instill Americans with a sense of purpose, togetherness, and connection to something larger than themselves. It would increase investment in our civic life. While the duration of the program would be temporary for each participant — unlike the $15 minimum wage proposed by Democrats — its participants would continue to enjoy its benefits long after it concludes. And it would provide a means for all Americans to participate in economic and community life: not just those left behind in today's economy, but also those who have become detached from the everyday realities and struggles of so many of their fellow citizens.

SUPPORTING WORKERS

American workers are becoming increasingly disengaged from the labor force. At 62.9%, our workforce-participation rate is near a 40-year low. That's weak not just by our standards, but from a global perspective: The labor-force participation rate of prime-age males in the U.S. is lower than all other countries in the Organization for Economic Cooperation and Development, except for Italy and Israel. While the U.S. ranked sixth among OECD countries in labor-force participation for women in the 1990s, it has since dropped to 22nd. The decline has been especially severe for low-skilled workers: Of high-school dropouts aged 25 and older, fewer than half are in the labor force.

The reason for the decline in work has been the subject of much debate. The right has tended to point to government programs that discourage work and an influx of low-skilled immigrants taking jobs from natives; the left has harped on the decline in union participation and a low minimum wage. The benefits of these partisan diagnoses is that their solutions are relatively straightforward: reduce access to certain government programs, reduce the number of visas issued, or raise the minimum wage. 

But the reality is more complex and helps to explain why efforts from both political parties have failed to assist more Americans in re-entering the labor force. In a recent paper, economists Katharine Abraham and Melissa Kearney identify globalization and technological advances as the largest contributors to the decline in the prime-age employment-population ratio. Companies moving factories overseas or finding that robots perform jobs more cheaply than people account for up to half of the decline in work.

The seemingly inexorable forces of technological development and globalization are more challenging to address. Both have brought widespread economic benefits to America and cannot be easily reversed without significantly shrinking the size of the economy and contributing to further job loss. (The Trump administration's tariffs, for example, have already caused some U.S. farmers and manufacturers to lay off workers, seek bailouts, or move operations overseas.) Still, American workers who have borne the brunt of globalization's costs deserve more support.

The existing system is not up to the challenge. Both parties devote a lot of attention to federal employment and training programs that aim to "re-skill" workers, but the impact of such programs is questionable. In a study commissioned by the Department of Labor reviewing the nation's work and re-skilling programs, researchers found that participation in such programs did not increase the earnings or employment of displaced workers, and in some cases actually reduced their employment benefits. To be sure, apprenticeship and vocational-training programs have shown great promise, especially when they're directly sponsored by a business, and these efforts deserve further support. But their scalability is unclear, and they tend to be more helpful for those early in their careers, not mid-career professionals.  

Additionally, our web of government programs often keeps people out of the labor force instead of encouraging re-entry, exacerbating the decline in work. According to a recent report by the Council of Economic Advisers, a large share of non-disabled, working-age beneficiaries of non-cash welfare programs do not work much, if at all. Because incremental increases in work hours or income can result in a precipitous drop in benefits, both cash and non-cash welfare programs discourage work by imposing an implicit tax on employment. Indeed, the implicit marginal tax rates for low-income households are often higher than those facing wealthier households.

We can do better. The most straightforward option is to directly subsidize work — an approach that's already an effective part of the existing tax code in the form of the Earned Income Tax Credit. The EITC boosts the wages of work. As a result, it has proven to be a reliable policy tool for improving labor-force participation as well as the financial stability of lower-income households. But the existing credit has its downsides. Because it is based on household income, it can discourage married women in particular from working. It is designed to favor those with children; currently, childless single workers can accrue only up to $500 a year, which limits its positive effects. Additionally, the EITC comes only at the end of the tax year, making it less helpful for families who live paycheck to paycheck.

A rethought work credit could address these shortcomings. For example, it could be delinked from family structure entirely. In this way, the EITC would be more true to its purpose as a work credit, while families could be more directly supported through subsidies for children. This would also eliminate much of the fraud that now exists in the system (which is largely related to the custody of children) helping to pay for the cost of the expansion; it would also eliminate the marriage penalty. Though the new credit would mean less support for workers with children than under the existing model, the Child Tax Credit could be adjusted to offset this decline.

This would allow for a standard maximum credit for any worker, as long as income requirements were met. For example, the maximum EITC payment could be set at $5,000 per full-time worker, to be phased out beginning at $15,000, or the equivalent of a $10-an-hour wage (accounting for the credit). The end result would be that anyone who worked full time would take home the equivalent of at least $10 an hour, boosting take-home pay as well as encouraging work. It is not an accident that the EITC has been most successful in increasing labor-force participation for single mothers, the group that can access a larger sized credit currently; such an increase would likely dramatically increase labor-force participation for other workers as well. Of course a more elegant approach still would be to subsidize wages directly in each paycheck, though this creates issues with targeting support to low-income households. Versions of a rethought work credit have been proposed on the left and the right in recent years, from Isabel Sawhill of the Brookings Institution to the Manhattan Institute's Oren Cass, suggesting room for bipartisan reform.

Properly supporting workers also requires education reform. Our main form of higher-education grants — Pell Grants — can go only to individuals without a bachelor's degree and apply only to programs over 600 hours. They cannot be used for training and vocational programs, and so provide little assistance to mid-career professionals who lose their jobs and seek retraining. At a minimum, Pell funding should be applicable to vocational and apprenticeship opportunities outside of a traditional four-year college degree and be made available to those of any previous educational level, as proposed by the Trump administration's Council of Economic Advisers. Additional reforms could be implemented to change the incentives around the grant and encourage positive labor-market outcomes, such as stacking the grants to encourage graduation (since nearly half of recipients drop out of their programs) or allowing more generous grants to students who attend programs with demonstrated employment and wage effects. Such data could be gathered from the Pell Grant recipients themselves.

These programs are likely to partially offset their costs by boosting labor-force participation and thus tax receipts, as well as reducing dependence on other government programs, but significant costs will still remain. Money for these programs should come from a re-allocation of existing spending, not greater levels of taxation. This does not mean taking funds from existing anti-poverty programs — the government should not deprive some struggling Americans of benefits in order to help others. But the full array of federal tax credits and benefits should be on the table. For example, tax deductions for home mortgages and graduate-school tuition tend to benefit higher-income Americans. Another area ripe for reform is the employer health-insurance tax deduction, which cost $260 billion in 2017. It's the single largest tax expenditure in the code, is likely contributing to inflated health-care costs, and should be reduced or capped. Those resources could be better spent investing directly in people's paychecks in a way that would benefit a broader range of workers.

The main criticism of wage subsidies and insurance, of course, is that they are helpful only if one is employed. Fears of the coming artificial-intelligence revolution and widespread job losses have led some in both parties to tout proposals that would guarantee a certain level of income to all Americans: Some on the left prefer a guaranteed job with a $15 minimum wage; some on the right, a universal basic income. Both of these proposals, however, are likely to further discourage private-sector work, to say nothing of their costs.

Government-guaranteed jobs that pay $15 an hour could replace up to half of positions currently in the private sector that pay this amount or less, indefinitely diverting a large portion of workers into public employment. As workers employed by the government lose the skills (or will) to compete in the private sector, their options for private-sector jobs will inevitably decrease, and their dependency on the government will grow — along with the cost of the program. There is no proposal that would more rapidly reduce the competitiveness, dignity, and purpose of low-skilled American workers — all the while bankrupting the country.

Though advocates of government-guaranteed jobs claim that the private sector would "just pay workers more to retain them," businesses will ultimately hire fewer workers, especially low-skilled workers. Just as with a higher minimum wage, the left's other favorite "pro-work" proposal, this policy would exacerbate the decline in workforce participation and further discourage the hiring of low-skilled workers.

A guaranteed income would also exacerbate the decline in work and wages, and potentially move people out of private-sector employment completely even when such options exist. It would be far better to keep as many people connected to employment as possible and, to the extent that wages are too low to encourage work or to provide for a family, to directly subsidize wages and boost workforce participation in the private sector.

A NEW VISION FOR ENTITLEMENTS 

Finally, building a sustainable economy that promotes growth and opportunity requires entitlement reform. The politics of such reforms will never be easy, and our time is no exception. But that is not an excuse to avoid the pursuit of reforms that could provide security to beneficiaries while averting fiscal disaster.

The federal debt is expected to surpass the size of the economy in the next decade, a crisis driven almost exclusively by entitlements and interest payments. An ever-larger share of federal tax revenues will be devoted to benefits and interest, crowding out room for productive investments — such as education and infrastructure — and reducing the nation's latitude to deal with future crises ranging from wars to financial meltdowns. The entitlement programs themselves — Social Security, including Social Security Disability Insurance (SSDI), and Medicare — will soon be insolvent, compromising benefits for those who depend on them in their poverty, illness, and old age. Within 10 years, the SSDI trust fund and Medicare hospital-insurance fund will be insolvent; the entirety of Social Security will run out of resources by 2034. Moreover, the nature of work and family has changed since these programs were created, meaning that they fail to address a number of new worker needs such as short-term disability insurance and paid leave. New worker protections will not be added, however, without the resources and political will to deliver on benefits already promised. 

If action is not taken soon, the remedy will be painful for all Americans: historically high rates of taxation, significantly reduced benefits and public services, or, in the case of gridlock and an inability to do either (perhaps the most politically likely outcome), the diversion of greater federal revenue to higher and higher interest payments and away from meaningful programs. A long-term and sustainable solution is needed for the federal debt.

The previous administration already proposed one plan to restore fiscal balance. In 2010, President Obama created the bipartisan National Commission on Fiscal Responsibility and Reform, led by Erskine Bowles and former-senator Alan Simpson. The commission's plan would have reduced federal deficits by $4 trillion; it included an ambitious combination of tax reform, changes to Social Security including raising the retirement age and increasing the taxable wage base, capping discretionary spending, and altering the growth rate in Medicare payments, among other provisions.

The Simpson-Bowles plan had support from leaders of both parties, but it ultimately failed to garner enough support in Congress and has more or less been abandoned. One reason it failed was that the solutions didn't fit neatly into either party's political agenda, and thus neither was willing to argue forcefully for its implementation. But there was likely another reason: The proposed combination of marginal tax increases and benefit cuts — however necessary — was far from inspirational, requiring shared sacrifice without much tangible upside. And while the Simpson-Bowles plan would be sufficient to restore fiscal balance, it said nothing about the types of benefits that should be available to our 21st-century workforce, beyond tweaks of the existing programs.

The country needs a new vision for entitlement reform that not only restores fiscal balance but also modernizes benefits for today's labor force. For example, even if the current entitlement system were made more financially sound, it would still not offer much to workers in prime-earning years who face unexpected and costly medical conditions or prolonged periods without an income; it largely is a system for the elderly. While a worker can pay in and receive indefinite weeks of Social Security benefits after retirement, there is no system that a worker can pay into and receive benefits after the birth of a child. Similarly, there is no system in place for a 40-year-old worker who is diagnosed with cancer and has to endure several months without an income to pay for treatment. 

The existing system is also adding to our crisis of work. Outside of the effects of technology and globalization, Social Security Disability Insurance is recognized as the single biggest factor explaining the decline in employment of prime-age workers, according to a recent paper by economists Abraham and Kearney. Social Security retirement benefits encourage workers to retire earlier than they otherwise might. Furthermore, the existing system treats many entitlements as milestones, not as safety nets. For example, when Americans reach the age of 67, Social Security retirement benefits arrive, regardless of whether the beneficiary is a billionaire or a minimum-wage worker, and regardless of whether he is able to continue working.

An alternative model would restore fiscal balance, cover more events throughout workers' lifetimes, and even increase their attachment to the labor force. In this system, Social Security and Medicare would be means-tested, as Simpson-Bowles proposed, but in this case more aggressively. This means that Americans would be eligible to receive benefits only if they fall below a certain income or wealth level. Alternatively, benefits could be cut if lifetime earnings surpass a certain level. This is necessary to preserve the programs' solvency and their original role as insurance for the elderly and needy, instead of government-provided retirement and health-care benefits for everyone irrespective of need.

Savings from means-testing could be redirected to help disadvantaged Americans who do not receive adequate benefits from the current safety net. Access to permanent benefits through Social Security Disability Insurance could be tightened — as has been proposed by both President Trump and President Obama for fiscal and labor-market reasons — in exchange for the creation of a short-term medical-leave program for workers dealing with unexpected and serious health conditions, such as cancer, heart disease, and other illnesses. Such a program is badly needed, as the majority of workers do not have insurance for serious medical events that would require extended time out of the labor force.

Additionally, there would be the space and resources for a paid parental-leave program. It is widely recognized that paid parental leave not only significantly boosts work and wages of new mothers (by 10% to 17%), but it also yields broad health benefits for parents and children. There is bipartisan support for such a policy; the disagreement is around the resources to pay for it. Broader entitlement reform provides the answer.

This new system would provide more comprehensive benefits than the status quo, aiding workers of all ages throughout the ups and downs of life. It would also do more than the current system to increase the labor force by encouraging work and boosting wages. The availability of Social Security based on need rather than age would likely encourage Americans to keep working if they were able to, and paid leave for short-term medical events and parental leave would also result in more people staying connected to the labor force. Additionally, a smaller entitlement system would likely result in reduced payroll taxes, raising take-home pay. 

Many policy experts have proposed versions of a more modern entitlement system, but they have not been comprehensive. Andrew Biggs and Kristin Shapiro, scholars at the American Enterprise Institute and the Independent Women's Forum, respectively, have proposed withdrawing Social Security benefits early to support parental leave and "paying" for these benefits by delaying retirement. This would provide more flexibility than the current system and increase access to paid leave — an important step forward. But without broader reforms to Social Security, this proposal is paid for by government debt. And at first blush, there's something fundamentally unfair about making a woman choose between taking benefits when having a child or in her old age when need might exist for both. A litmus test for entitlement reform should be that it strengthen the solvency of welfare programs and improve need-based benefits, not reduce them.

The main critique of this type of comprehensive entitlement reform is familiar: Workers paid into the system and are entitled to the benefits they were promised (even though many workers receive more in benefits than they contributed). But without reform, workers will not receive the benefits promised; across-the-board payment cuts will be inevitable within two decades. Without change, future generations will have less economic opportunity than their parents did, not more, as a result of the debt and bankruptcy of existing programs. Parents are currently asking their children to pay for their benefits — opposing any small changes to them — with the full knowledge that such programs will not exist for their children. Meanwhile, parents watch their children struggle to balance work and family lives in a more competitive economy. This is backwards and unsustainable. 

It is time to rethink how we provide entitlements. The current system is bankrupt, and workers' needs have changed. Our entitlement system should not only be sustainable but also provide future generations with more opportunity, not less.

GROWTH AND OPPORTUNITY 

A healthy economy is a growing one. Each generation cannot have greater economic success than the one that preceded it unless the economy is increasing in size. If the economy stays the same, some individuals can do well only if others do poorly; in this zero-sum scenario, the most connected and skilled individuals usually win. This is the fundamental problem with proposals on the left that reduce growth and competitiveness in the name of increasing economic opportunity. Economic growth is most essential for those at the margins of the economy; this is why the Trump administration's emphasis on economic growth is an important one, especially given that our aging population and debt threaten growth over the long run.

But Republicans' focus on growth to the exclusion of other policies — policies targeted at strengthening community, encouraging work, and restoring fiscal balance — is misguided.

Economic growth, while necessary, is insufficient to address many of the challenges of our 21st-century economy: stagnant economic opportunity rooted in the breakdown of families and communities, pressures on the American worker from technological change and trade, and our unsustainable fiscal trajectory. It is also an insufficient response to figures on the left, increasingly self-identified as socialists, who have accurately identified the holes in a growth-alone agenda — holes that conservatives have not addressed. They may well be rewarded for their diagnosis, even if their solutions are misguided and would worsen the underlying problems.

We need an economy that is both dynamic and inclusive, one that works from the bottom up, helping to restore connections and improve the agency of individuals and communities to care for one another. We need to give dignity back to the American worker, both now and in the future, and explicitly invest in the worker above other priorities. We need an economy that provides better benefits in times of need across a person's lifetime, not just at the end of life, while putting the U.S. on a sustainable budget trajectory so that both economic growth and economic opportunity can be maintained over the long term.

Conservatives have the growth part right. Now, they need an agenda that helps more Americans enjoy its benefits.

Abby M. McCloskey is an economist and political commentator. She is the founder of McCloskey Policy LLC, a research and consulting firm serving business and political leaders across the country, including presidential and congressional candidates, cabinet-level appointees, Fortune 500 CEOs, and foundations.


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