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The Agenda

NRO’s domestic-policy blog, by Reihan Salam.

Quick Notes on the President’s Associated Press Speech



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I don’t think of myself as radical, dangerous, or on the fringes of American intellectual life. But judging by the president’s recent remarks at an Associated Press luncheon, I am all of these things and more.

An annotated passage from the president’s fascinating speech:

For generations, nearly all of these investments — from transportation to education to retirement programs — have been supported by people in both parties. As much as we might associate the G.I. Bill with Franklin Roosevelt, or Medicare with Lyndon Johnson, it was a Republican, Lincoln, who launched the Transcontinental Railroad, the National Academy of Sciences, land grant colleges. It was Eisenhower who launched the Interstate Highway System and new investment in scientific research. It was Richard Nixon who created the Environmental Protection Agency, Ronald Reagan who worked with Democrats to save Social Security. It was George W. Bush who added prescription drug coverage to Medicare. [Emphasis added]

What leaders in both parties have traditionally understood is that these investments aren’t part of some scheme to redistribute wealth from one group to another. They are expressions of the fact that we are one nation. These investments benefit us all. They contribute to genuine, durable economic growth.

(1) For more on the G.I. Bill, I recommend Ira Katznelson’s When Affirmative Action Was White. (Here is a brief introduction to the central themes of the book.) Katznelson is firmly on the left, yet he complicates the conventional narrative surrounding the G.I. Bill and other social programs launched during the New Deal-Fair Deal era. This isn’t to say that the G.I. Bill shouldn’t have been implemented. Katznelson is primarily concerned with the inequitable way it was implemented, particularly in the Deep South. But as Katznelson’s title suggests, it does seem fairly clear that there was redistribution from one group to another — and the prime beneficiaries were less-affluent whites.

(2) Check out Peter Suderman on the history of Medicare and Yuval Levin on its future. While one could certainly describe Medicare as an investment in some loose sense, it seems fairly clear that much of Medicare spending is consumption-like. And of course the beneficiaries are the elderly individuals who receive medical treatment under Medicare and medical providers. So we could say that Medicare involves the redistribution of wealth from the young and from people who aren’t medical providers to the old and to people who are medical providers.

(3) Were the subsidies that led to the construction of the Transcontinental Railroad a net plus for the United States, and particularly for less affluent Americans? I recommend reading Robert Fogel’s brilliant Railroads and American Economic Growth and Railroaded by the left-of-center historian Richard White. The evidence that the subsidies that facilitated the construction of the transcontinental railroads entailed the redistribution of wealth from taxpayers and the producers of agricultural commodities to investors in the transcontinental railroads seems pretty rock-solid. 

(4) Has the Interstate Highway System proven an unalloyed good? Has it enhanced our quality of life, improved public health, and made our cities more vibrant, productive, and prosperous? Though it certainly facilitated the rise of the automobile-dependent suburb, and the automobile industry more broadly, were there alternative modes of urban and economic geography that might have emerged in a counterfactual world in which the Interstate Highway System wasn’t constructed, or rather in which something like it was constructed with greater involvement by private investors and state governments? The left-leaning environmental historian Owen Gutfreund offers a critical perspective. Though there is no question that the Interstate Highway System had considerable spillover benefits, it did entail a redistribution of wealth from people with one set of preferences (to live in compact urban neighborhoods) to people with another (to live in low-density suburbs). The highway system also greatly facilitated the rise of trucking and it accelerated the decline of freight rail. It seems fairly clear, however, that the U.S. rail network, which achieved extraordinary sophistication in the early decades of the last century as John Stilgoe documents in his excellent Train Time (one of my favorite books), could have continued to evolve and improve. For more on the virtues of rail, I recommend Phil Longman’s “Back on Tracks.”

(5) David Schoebrod’s Saving Our Environment from Washington is somewhat dated, but it offers a lively history of federal environmental regulation. Suffice it to say, the creation of the EPA has also entailed redistribution of wealth, primarily from potential new entrants in various industries to incumbent firms that are well-equipped to handle rising compliance costs. 

(6) The Social Security compromise in question secured a large regressive payroll tax increase, yet it failed to address a number of underlying problems including the program’s implicit discrimination against secondary earners, its failure to adequately meet the needs of low lifetime earners, and the long-range fiscal imbalance created by its pay-as-you-go structure. Though the Social Security system can be understood as a forced savings program, it certainly has redistributive elements. This isn’t a bad thing! Indeed, I’d like to see those redistributive elements strengthened. But it seems strange to deny that these elements exist.

Show me a business leader who wouldn’t profit if more Americans could afford to get the skills and education that today’s jobs require. Ask any company where they’d rather locate and hire workers –- a country with crumbling roads and bridges, or one that’s committed to high-speed Internet and high-speed railroads and high-tech research and development?

(7) The implicit distinction the president is drawing is an interesting one. Has increased federal investment in K-12 education corresponded to increased efficiency and performance of K-12 education? We have some reason to believe that this hasn’t happened, per Hoxby and others. Is increased direct spending on infrastructure the best way to improve the quality of infrastructure or should we consider the use of road pricing and other mechanisms that will generate new revenue streams and encourage the more efficient use of the underlying resource? Must commitment to high-speed X, Y, and Z mean direct public spending, or might it mean revamping the regulatory environment and creating a more attractive environment for private investors? 

The rest of the speech is worth reading. Rather than annotate it, I’ll offer a few thoughts. The president seems to believe that it is obviously foolish and perhaps even inhumane to question the following premises (among many others):

that Medicare as we know it should continue to exist, and that it should be spared structural reform in the direction of a defined contribution system;

that subsidies for the creation of the transcontinental railroad were obviously beneficial;

that the Interstate Highway System has been an unalloyed good;

that the expansion of federal regulation has done more good than harm;

that the Social Security settlement reached by President Reagan and congressional Democrats was the only sensible and realistic way to address that program’s underlying weaknesses;

and that the central problems facing our education sector and our transportation network is that we haven’t devoted enough public spending to both, not that we’ve failed to allocate resources effectively. 

My guess is that the vast majority of people probably side with the president on these and other questions. But most people haven’t had the luxury to think deeply about these questions, or to recognize that there are alternative narratives. That is why it seems like such a profound failure of imagination to believe what the president seems to believe. 



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