Ethics & Public Policy Center

The GOP’s Entitlement Challenge

Published in The National Interest, January/February 2015 issue on December 17, 2014


Republicans ought to be familiar with the concept of temptation. Resisting temptation is a big theme in Christianity, as the Lord’s Prayer reminds us, and the modern GOP has long been the preferred party for the observant Christian. Yet when it comes to the central politico-economic question of our time—the declining wages available to the unskilled or semiskilled worker—many on the right succumb all too easily.

If it seems odd to think of temptation in the context of economic policy, then try and put yourself in the shoes of a Republican politician. You have campaigned on the premise that a vibrant, entrepreneurial private sector lifts all boats. You have argued that lower taxes, less regulation and fewer government services are the elixir that brings growth to life. And yet when you go home for reelection, you are besieged by many voters who feel they have been falling behind in good times and drowning in bad ones.

That politician invariably is tempted to ignore these complaints, to refuse to see what is plainly before his eyes. He is thus tempted to oppose Medicaid expansion, food-stamp caseload growth and other income transfers that replace some part of these people’s declining wages. He is afraid that otherwise he simply would become a modern Rockefeller Republican—a “me too” politician of the sort the modern conservative movement was formed to abolish.

It is tempting, therefore, to imitate Nancy Reagan and “just say no.” But those who do this, however, are following the wrong Reagan. These voters do need help, and they will vote for people who seem to understand their plight and will do something about it. They might not like the heavy hand of government, as their distrust of Obamacare demonstrates, but if the only alternative they are presented with is “just say no,” they will, reluctantly, support the politician who seems to care about people like them.

Instead, conservatives should follow the right Reagan, Nancy’s famous husband Ronnie. They need to begin by acknowledging the reality of economic stagnation for the bottom half of the American workforce. This development is already straining the safety net. But many of those working-class voters are located precisely in the two places a Republican presidential candidate needs to carry to win the White House: the industrial Midwest and the immigrant hotbeds of the Southwest and Florida. Most Republican politicians in these states are either “just saying no” or saying “me too” to government attempts to ameliorate these realities through liberal redistribution, moves that allow liberals to define both the problem and the solution for those affected. A better approach would be for GOP conservatives to recognize the very real difficulties these voters face and seek to devise innovative ways to address them. By doing this, Republicans can do what Ronald Reagan would do if he were alive today in order to address their decades-long empathy gap and recover their historic role as the natural home for the American worker.

 

INFLATION-ADJUSTED HOUSEHOLD income for most Americans peaked at the end of the Clinton administration. One would certainly expect that income would be lower today after the Great Recession and the modest recovery that has followed it. But even prior to the recession, most families’ incomes remained below their 1999–2000 peak. The least educated Americans—those with only a high-school diploma or less—saw their real incomes decline.

A close examination of Census Bureau data makes this clear. Americans who have either graduated from high school or dropped out of college without a degree comprise roughly half of U.S. households (53.5 million out of 116.1 million). Their real median incomes rose in the 1990s but fell during the Bush boom. Americans in these groups saw their incomes decline even during the growth years of 2003–2007 and plummet even more after the Great Recession.

It’s possible that these statistics are misleading due to Americans’ increasing educational attainment. Each group of eighteen-year-olds is more educated than the last, and this can affect the data above in two ways. First, the oldest Americans are also the least educated. As more of them retire, their incomes will naturally go down. This could drag down the median incomes for those groups, thereby hiding growing incomes for the portion that remains of working age. Second, it’s natural to assume that those young people who “move up” the educational ladder are, on average, less productive than those who match their parents’ education level. This lowers both educational groups’ median incomes: the most productive members of the less educated group leave that group’s statistics, lowering the income for that group, but they are less productive than the average member of the new group, which also lowers that group’s median income.

Looking at median income by age cohort should control for each of these effects. If each age cohort is more educated than the preceding one, its median income should rise, since income tracks educational attainment. It also controls for the aging of America by only comparing like to like: the less educated elderly are only compared with earlier groups of elderly, who were in turn less educated than the current group. Thus, if economic growth were distributed according to America’s historical pattern, the age-cohort approach should show median incomes rose for all age groups between 2003 and 2007.

That, however, was not the case. Median real incomes increased only for people fifty-five or older. Younger Americans did not fare so well. Real incomes for all of the younger age cohorts peaked in 1999 or 2000. Americans younger than thirty-five saw their incomes modestly recover between 2003 and 2007 but remain below their Clinton-era peak, while those between thirty-five and forty-four saw their incomes stagnate. Americans between forty-five and fifty-four, historically the highest-earning Americans, saw their real incomes decline throughout the Bush years.

These data were the worst for these age cohorts of any since the Census Bureau started keeping these records in 1967. During each preceding business cycle, real incomes rose during years of growth and fell during recessions. Incomes in each trough were almost always no lower than in the preceding trough, and incomes at each peak were almost always higher than at the preceding peak. The post-2000 divergence from this pattern strongly suggests that incomes did stagnate or decline.

A third Census Bureau data set confirms this finding. This set looks at the upper income bound for each household family quintile. If real incomes are rising for Americans of all skill levels, the upper real limit for each quintile should rise. That’s because the quintile approach measures where each American household stands in relation to others, regardless of the overall level. If all boats are rising, the upper limit for each quintile should also rise. Prior to the 2001–2007 period, this had in fact happened: during every period of growth, the upper limit for each quintile from the richest to the poorest also rose, and with one exception also always exceeded its previous high.

This stopped in the last decade. The upper income limit for each of the bottom three quintiles reached their peaks in 1999 or 2000 and never regained their pre–Great Recession level. The upper limit of the fourth quintile was up only 1 percent over its 1999 peak, by far the weakest showing in the past fifty years. For the bottom 80 percent of the American income distribution, the first decade of the twenty-first century was truly lost.

The story is even worse today for those at the bottom. While the Great Recession significantly reduced median incomes for all quintiles, it was especially destructive at the bottom. The upper limits for the bottom two quintiles in 2012, the last year for which we have data, are equivalent to those from 1994–1995. If you are a low-skilled, nonimmigrant American, chances are you have not seen a real raise in twenty years.

 

THIS ECONOMIC fact has serious policy implications for conservatives and Republicans. Declining real incomes and extended bouts of unemployment intersect with the structure of America’s safety net to increase the number of people eligible for existing programs. This also creates greater demand for some government redistribution, resulting in greater popular appeal for extensions of the American welfare state.

Economic stagnation also increases pressure on the existing safety net because many programs condition their eligibility on household income, not on work status. Food stamps, for example, are available to any household with a gross income up to 130 percent of the federal poverty limit. In 2014, that equaled $31,005 for a four-person household, meaning that adults could earn just shy of $15 an hour for full-time, year-round work and still be eligible. Since the poverty limit climbs each year, stagnating wages result in greater eligibility. Families with college-aged children can qualify for Pell Grants or Supplemental Education Opportunity Grants with incomes well into the lower ranges of the middle class. Federally financed health-insurance programs, like Medicaid and the Children’s Health Insurance Program (CHIP), also are available based on household income rather than work status, so stagnating wages for those at the bottom of the economic ladder also result in greater eligibility for these programs.

The incongruous result is that workers in some of America’s best-known and most profitable companies are deriving benefits from safety-net programs. According to the Dayton Daily News, 117,890 people working at one of the fifty largest firms in Ohio were receiving food stamps, and 141,182 were on Medicaid in February 2013. The list of employers with large numbers of workers receiving benefits was dominated by restaurant chains (McDonald’s, Burger King, Bob Evans and Wendy’s), large grocery chains (Kroger) and Walmart. Nearly 30 percent of Walmart employees received food stamps, according to the report.

Stagnating incomes at the bottom also make federal programs conditioned on nonwork more attractive. The Social Security Disability Insurance (SSDI) program is a case in point. SSDI was created in 1956 to ensure that Americans who could not work because of serious disability would not become poor. Over the years, the definition of serious disability was expanded so that it now includes general complaints of pain and mental issues such as depression. Vocational factors such as the applicant’s ability to get a job given one’s age, education and work history are also part of the disability determination. The result, combined with the economic difficulties facing low-skilled workers, has been dramatic.

SSDI caseloads have exploded in the last twenty years, and especially in the last decade. In 1989, about three million Americans received SSDI. Today, it’s almost ten million, and about eleven million if you include children and spouses of disabled workers. No one who looks at the program believes the large spike in caseloads is because America’s workplaces have become less safe. Instead, most observers contend that it is because the expanded definitions of disability have intersected with declining opportunities for good jobs for low-skilled, older workers to give rise to a massive temptation for those people.

Consider the case of a man in his fifties whose factory closes. SSDI offers him a steady check of about $1,000 a month. He is also eligible for Medicare if he has been disabled for two years, and the long backlog to process SSDI claims means most applicants can expect to receive Medicare immediately upon enrollment. So, if this worker says, “I can work,” he has to struggle to find a job that may not pay more after tax than the $1,000 a month and may not offer health insurance. If he says, “I can’t,” he gets a low but secure payment for life. And he can qualify based on very subjective, difficult-to-disprove criteria that take his lack of job opportunities into account.

Given this, it should be no surprise that SSDI applications soared in the last decade, even prior to the Great Recession. While SSDI applications have risen and fallen based on the unemployment rate for some time, annual applications remained below two million until 2001. They rose by almost 50 percent between 2001 and 2004, and remained at historically record levels until the Great Recession. They rose another 33 percent between 2008 and 2010 to hit nearly three million. Nearly 1.75 million people have been added on net to the SSDI rolls since 2008. Many observers have noted that labor-force-participation rates are at thirty-year lows; the opportunity to do as well or better on SSDI than in the economy surely has had an important impact on that.

The cost for the American taxpayer for this is huge and rising. SSDI benefits alone were $140 billion in 2013, or a bit less than 1 percent of SSDI. Medicaid payments for disabled people, which mainly include people receiving benefits from another disability program, Supplemental Security Income (SSI), were another $167 billion (at both the state and federal levels) in fiscal year 2012. Medicare spent yet another $68 billion on disabled, nonelderly recipients in 2012, more than double what was spent in 2001. And SSI, which serves mainly disabled children, the elderly and the blind, spent another $56.2 billion in fiscal year 2014. Together, this means that taxpayers pay at least $441 billion in benefits or services for disabled people, or over 2.5 percent of GDP.

This growing reliance on the safety net is likely to increase dramatically under Obamacare. By chance or design, that measure’s key features are most directly beneficial to working Americans with below-median incomes. The Medicaid expansion allows states to extend coverage for all adults in households making less than 138 percent of the poverty level, or $32,918 for a family of four. Households making above that level can get health insurance through state or federal exchanges. If these households choose the cheapest, “bronze” plan, they would receive family health insurance without having to pay any premiums. This is big money for these families. According to the Henry J. Kaiser Family Foundation’s online subsidy calculator, a family of four in Marietta, Ohio, making just above the cutoff for Medicaid eligibility would receive over $7,000 in tax credits for a bronze plan.

This tremendous subsidy is available even for households earning much more. The Kaiser website tells us that this Marietta family would still receive a free bronze plan if it earned up to $53,000, slightly higher than the national median income of $51,000. Even a family of four earning $65,000 would pay only about $1,900 for a bronze plan, receiving over $5,100 in federal subsidies.

Other exchanges in political swing states are not as generous, but in Iowa (Dubuque), Wisconsin (Wausau), Colorado (Pueblo) and Nevada (North Las Vegas), bronze plans are free or cost less than $150 a year for families of four earning up to $39,000 annually.

It is easy to see why the safety net and Obamacare are enormously important for low-skilled Americans making below the median income. Nationally, these people are still outnumbered by those who are making more than $65,000 a year and the elderly. What makes this a particularly difficult political challenge for conservatives to address is the fact that the very states they need to gain to win back the presidency benefit disproportionally from these programs.

 

THE LIST of battleground states hasn’t changed much in the past twenty years, and is unlikely to change much before 2016. That means the next Republican nominee must pick up the electoral votes needed to win from a small group of states: Florida, Virginia, Ohio, Iowa, Colorado, Wisconsin, New Hampshire and Nevada. Virginia is a special case because of the large number of highly educated Northern Virginia voters attracted to Washington, DC, by the federal government. In each other case, GOP hopes rest on persuading larger numbers of white or Hispanic working-class voters to support the party’s nominee.

Colorado, Florida and Nevada all contain large, Democratic-leaning Hispanic populations that provided President Obama with his victory margins in 2008 and 2012. In 2012, their electorates were each between 14 and 19 percent Hispanic, and the president took between 60 (Florida) and 75 (Colorado) percent of those votes. The Hispanic population in each state continues to grow and in 2016 their share of the vote will be even higher.

Exit polls show that the growth or change in voting preference of the Hispanic community was the sole reason Mitt Romney lost each state. We can see this by comparing the share of the white vote obtained by both George W. Bush, who carried each of these states, and Romney. In 2004, Bush received 57 percent of the white vote in Colorado, 55 percent in Nevada and 57 percent in Florida. Romney received 54 percent in Colorado, 56 percent in Nevada and 61 percent in Florida. However, in each state the share of whites as a percentage of the electorate declined—by 3 percent in Florida, 8 percent in Colorado and a huge 13 percent in Nevada.

That decline was matched by large increases in each state’s Hispanic population. The share of the Hispanic vote in Colorado rose from 8 percent in 2004 to 14 percent in 2012; in Nevada from 10 percent to 19 percent; and in Florida from 15 percent to 17 percent. It’s true that Romney did much worse among Hispanics in these states and nationwide than did Bush, but even if Romney had matched Bush’s showing he would only have picked up Florida. By nearly doubling in size in only eight years, the Hispanic vote in Colorado and Nevada turned what had been reliably Republican states for decades into Democratic-leaning outposts.

Hispanic voters are overwhelmingly non-college-educated and earn below the median income. According to the Census Bureau, only 13 percent of Hispanics had a bachelor’s degree or higher in 2011. Thirty percent had no health insurance, and the Hispanic median income was only a shade over $38,000, significantly below the U.S. national median. Opinion surveys also show that Hispanics are much likelier than whites to support larger government and more services over smaller government and lower taxes. Any conservative effort to win back Colorado and Nevada must take notice of these facts.

A conservative GOP nominee may seek to counter these trends by relying on the swing states of the Northeast and Midwest. These states have few Hispanics and, except for Ohio, have much lower percentages of African Americans and Asians than the rest of the country. They are dominated, however, by blue-collar voters that are not evangelicals. Exit polls from 2008 show that whites without a college degree were a majority of the electorate in Ohio, Wisconsin and Iowa, and 45 percent in New Hampshire. This was much higher than their 39 percent national share. Moreover, blue-collar whites in these states are much likelier to be Catholic or Lutheran than they are nationally. Accordingly, President Obama carried the white working class in Wisconsin, Iowa and New Hampshire in 2008, losing it only in Ohio, where a larger percentage is neither Catholic nor Lutheran.

The president retained most of these voters in 2012 despite the poor economy. Journalist Ron Brownstein calculated that Obama carried whites without college degrees again in Iowa and ran even with Romney among them in New Hampshire. He carried 45 percent of them in Wisconsin and 42 percent in Ohio, high enough in each state to allow his urban coalition of blacks and liberal, well-educated whites to carry him to victory.

Data compiled by political scientist Larry Bartels show that the president’s support among non-college-educated whites came largely from the working and lower-middle classes, exactly the people most affected by the Great Recession and the wage pressures of the preceding decade. Bartels’s analysis shows that non-Southern whites making less than about $45,000 a year voted for the president in 2012, and those making between $45,000 and $62,500 gave him more than 45 percent of their votes. Conservative analysts may decry the dependency safety-net programs engender, but clearly those voters who have struggled for decades were not so concerned.

These facts have not gone unnoticed by these states’ Republican governors. Every GOP governor in these states except Wisconsin’s Scott Walker has either expanded Medicaid or endorsed expansion, and even Walker reformed his state’s generous Medicaid program to expand insurance coverage by nearly one hundred thousand people without taking new federal money. Ohio governor John Kasich was so intent on expanding Medicaid prior to his 2014 reelection vote that he used his appointees to an obscure state board to get around opposition from Republicans in his state legislature to expand the program. The nation’s two Hispanic Republican governors, Nevada’s Brian Sandoval and New Mexico’s Susana Martinez, also took leading roles in establishing their state’s exchanges pursuant to Obamacare. Republican governors in Michigan and Pennsylvania, two other potential swing states that lean slightly Democratic, also endorsed Medicaid expansion.

 

INDIANA REPUBLICAN governor Mike Pence’s 2014 announcement that he, too, would seek to expand Medicaid further shows how strong the political pressure is. Pence is so conservative that as a congressman he was one of just twenty-one GOP stalwarts not to vote for President Bush’s bill creating prescription-drug coverage for seniors. Yet Indiana is another state politically dominated by whites without college degrees. This group comprised 56 percent of the 2008 electorate, the highest percentage of any midwestern state. While this group also has a significantly larger evangelical Christian portion than elsewhere in the Midwest, Pence has surely recognized that the same economic pressures that make Medicaid expansion tempting for low-income whites elsewhere apply to Hoosiers as well.

Pence’s proposal is slightly different, and as such offers a lens through which one can view the options conservatives have in crafting an original response to these pressures. The largely hostile reception his idea has met among conservative intellectuals, however, shows that the “just say no” impetus remains strong on the right.

Pence’s idea builds on a program serving a part of the Medicaid population started by his predecessor, Mitch Daniels. The Daniels plan, called the Healthy Indiana Program (HIP), created Health Savings Accounts (HSAs) for forty thousand recipients. The state funded part of the recipient’s HSA, so long as the recipient also contributed. The state used its own funds for the HSA financing, although it continued to rely on a mix of state and federal funds for the underlying basic health-insurance coverage.

Pence’s idea would take this concept and expand it to over 330,000 able-bodied adults earning between 100 and 138 percent of the federal poverty limit. This is also the limit for expanded Medicaid eligibility under Obamacare, and Pence’s plan would use the money available for Obamacare expansion to pay for the HIP expansion. It would change the HIP plan significantly, lowering the amount of money recipients would be asked to pay into their HSAs and dropping any requirement they pay completely (those who would not contribute would get a less comprehensive plan). It would, however, add a premium-support component so that Hoosiers eligible for the new program who also could take employer coverage could use HSA dollars to pay their share of the premium in the employer-offered program.

Conservative opposition to Pence’s plan covers a host of issues, but essentially boils down to two: cost and dependency. The Heritage Foundation’s Nina Owcharenko focused on the first complaint in her attack, arguing that even if the state could, as it says, fully fund the expansion through 2020, “original estimates are likely not the true full cost.” Furthermore, since federal promises to pay a high portion of the expansion could be changed in the future, Indiana taxpayers could be legally stuck with paying a higher share of a much more costly program.

Owcharenko’s cost argument has been essentially echoed by many other critics, such as the Mercatus Center’s Veronique de Rugy. Unlike Owcharenko, however, de Rugy raises the issue of increasing dependency. Reducing dependence on government is increasingly cited by many conservatives as justification for opposing Obamacare, increased food-stamp usage, and a host of other safety-net or entitlement programs. This term is rarely clearly defined (the Heritage Foundation’s annual Index of Dependence on Government, which it published for over a decade before discontinuing it in 2014, included Social Security and Medicare as dependency-inducing programs, a claim virtually no conservative politician will seriously echo). It does, however, clearly include the receipt of government checks or in-kind services such as health insurance by able-bodied people of working age. The most vociferous conservative opposition to Pence’s proposal and, indeed, to Medicaid expansion generally, comes from this idea.

This is best elucidated by a blistering critique penned by the Foundation for Government Accountability’s Josh Archambault and his colleagues. They argued that Pence’s plan “creates a new entitlement largely for able-bodied, non-working adults.” They cite data showing that half of Indiana adults earning less than 138 percent of the federal poverty limit do not work at all, and only 14 percent work full-time and year-round. They contend that Medicaid expansion discourages work, citing studies showing that Medicaid expansion previously has reduced full-time employment and the likelihood of working at all by up to 11 percent. “This is particularly troubling given the fact that full-time employment moves people off of government dependence and into self-sufficiency [emphasis added].”

 

THIS ASSERTION brings us back to the original point, which is that the economic changes of the past fifteen years increasingly mean that full-time employment for the low-skilled does not create self-sufficiency, if by that term we mean relatively secure access to basic housing, medical care, transportation and food without government assistance. The federal poverty limit for a family of four is currently $23,850. A single earner working forty hours a week, fifty-two weeks a year would have to make $11.50 per hour to barely exceed that amount. Millions of people today can work full-time and still not lift themselves out of poverty.

The state of Ohio maintains detailed data breaking down hourly wages by occupation. Of twenty-two typical low-skilled occupations in the data set,[1] only two pay enough that a person making the occupation’s median wage and working full-time, all year could support a family of four above the poverty line. Most fall much short of that, earning less than $10 an hour.

These jobs are not a trivial part of the economy. In Ohio, over one million people have such jobs, nearly 20 percent of the state’s total employment. This means that over half a million people in Ohio work in jobs that don’t allow them to provide for themselves. And this is before benefits are mentioned; surely many of these jobs do not offer health insurance or retirement plans of the sort most of the readers of this article are accustomed to.

 

OF COURSE, in many families there are two adults and both could work to bring their household above the poverty line. Given the reality of children, however, it is highly unlikely that both adults would work full-time, or at least full-time at the same time of day. Most families in this situation can’t afford child care without government subsidy, so it makes economic sense for one member of the family to work part-time so that person can take care of the children before and after school. Shockingly, it is precisely this arrangement that Archambault and his colleagues also attack.

They note that Indiana data show that nearly half of all people in households earning less than 138 percent of the poverty limit do not currently work. They further note that only 14 percent work full-time all year round (whether that is by choice or because of unemployment they don’t say). Another 11 percent work full-time for part of the year, while another 26 percent work part-time for some or all of the year. Since they have previously argued that Medicaid reduces work, they use this data to contend that Pence’s proposal would make a bad situation worse.

Really? A single person without dependents who chooses to work less so he can play more is clearly morally distinguishable from a harried mom who chooses to work less to be at home when her kids get there. Not to distinguish between these different cases is very problematic, yet it is all too common for some in the “just say no” faction to fall prey to this temptation.

Pence’s proposal is trying to solve a very real problem. According to Archambault and his colleagues’ own data, 37.3 percent of Hoosiers in a household earning less than 138 percent of the federal poverty level are uninsured. That figure is 32.9 percent even among those working full-time, all year. Any children in these uninsured households are already eligible for publicly funded insurance through Medicaid or CHIP, so the question to answer is whether society should work to help adults have the same benefit.

Conservatives who “just say no” to this question ignore the political and economic realities of our time. They also ignore the manner in which conservative principles can be used to help address this problem without the sort of one-size-fits-all programs conservatives rightly decry. In this, they can draw on the principles elucidated by Ronald Reagan for guidance.

 

FEW PEOPLE would argue that Reagan was a fan of the modern welfare state. He burst onto the national political scene with “A Time for Choosing,” a televised address endorsing Barry Goldwater. The speech frequently equated American liberals with socialists and castigated people for trading liberty for the “soup kitchen of the welfare state.” Even then, however, Reagan did not oppose all federal efforts to help needy Americans. Indeed, this famous speech includes an oft-overlooked middle portion that provides prescient guidance for today’s conservatives who seek an alternative to “just say no” policies.

In that part, Reagan asserted that the federal government should ensure that no old person would become “destitute” because of old age, and that “no one in this country should be denied medical care because of a lack of funds.” In other words, he endorsed the principle that justifies Social Security and Medicare. He was critical of both programs, however, because they were “compulsory government program[s]” that did not allow individuals to make choices that would benefit themselves without compromising the purpose of the programs. Assistance for people who need it and private provision for people who don’t were the linchpins of Reagan’s approach to redistribution.

Today, these principles could be used to significantly reform the entitlement and welfare programs conservatives decry without heartlessly ignoring those in need. Health insurance for adults working at or near the poverty line, for example, could be provided on a premium-support model that gives workers a subsidy to purchase private-sector insurance. This could be significantly different from the exchanges under Obamacare because the policies available on those websites are heavily regulated by the federal government, with a whole set of mandated benefits and standardized coverage clauses that force people to buy insurance they neither want nor need. A conservative alternative would be much more flexible and permit people to buy all sorts of policies that better meet their health and financial goals. A Reagan-inspired conservative approach could also permit individuals receiving such financial aid to use it to meet their portions of any employer-offered policy.

Other programs like food stamps, unemployment insurance, SSDI and SSI could also be reformed to provide the right help to the right people in the right manner. For the low-skilled person who is not fully incapacitated, these programs could be changed along the lines of the 1990s-era welfare-reform bill conservatives of all stripes normally champion. That bill established firm work requirements so that able-bodied adults who could work in some way were required to work. It also provided work supports such as child-care vouchers, vocational counseling and tax credits for employers who hired welfare-eligible mothers so that discouraged but capable moms could have the right assistance to find and keep jobs. Contemporaneous expansion of the Earned Income Tax Credit (EITC) also functioned as an effective wage subsidy to ensure that single mothers working in low-skilled, low-pay jobs had their earnings raised so they weren’t financially tempted to give up.

SSDI and SSI, for example, could be reformed so that applicants on the margin (i.e., those physically and mentally able to do some work) received counseling and medication to treat their issues instead of being ruled incapable of performing any work whatsoever. If jobs were scarce in their cities, the federal government could offer relocation allowances to encourage them to move to more economically vibrant locations. (Unemployment insurance could also be reformed to permit this.) The money spent on food stamps for these people could be shifted, as proposed by Senator Marco Rubio, to some form of formal wage subsidy along the lines of a revised EITC. In each case, these types of reforms would make it easier for the challenged, low-skilled person to say “yes, I can” rather than “no, I can’t.” By embracing some form of federal assistance for these people in need, conservatives would likely reduce dependency more than they would under the “just say no” approach.

This approach would also begin to address conservatives’ long-standing political nemesis, compassion. Polls for decades have shown voters rate Democrats as being more compassionate than either Republicans or conservatives. Compassion was the issue in 2012, as is demonstrated by the exit polls. Voters were asked which of four qualities was most important to them in a president. Mitt Romney won among voters selecting three of these qualities: “Shares my values,” “is a strong leader” and “has a vision for the future.” Fully 74 percent of the voters chose one of these three qualities, and Romney won them handily by between nine and twenty-three points. He isn’t president today because he lost among the 21 percent who chose the fourth quality by sixty-three points. That quality: “Cares about people like me.”

Conservatives often fret about the gender gap, the racial gap and the marriage gap. But these gaps, large as they are, are probably driven as much by one underlying concern as they are by separate issues. Conservatives need to address the empathy gap, and “just say no” is precisely the wrong way to do it.

“The dreams of people may differ,” Ronald Reagan once said, “but everyone wants their dreams to come true.” For tens of millions of low-skilled Americans, their dreams are not coming true. For too many, they are turning into nightmares. American conservatism at its best embraces Reagan’s thought, combining a love of liberty with an overriding love of all people. In the present crisis, antigovernment fundamentalism threatens to place the two at odds with one another, to fatal effect for conservatism and for the country.

Henry Olsen is a senior fellow at the Ethics and Public Policy Center.

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