President Bush’s State of the Union address this week will mark the onset of the budget wars on Capitol Hill. The Democrats have already staked out the position they will take: the Bush combination of tax cuts and increased military spending harms the country by robbing funds from social-services programs, whose budgets will not grow or may even decline as a result. John Kerry expressed this view during the presidential campaign when he criticized the Iraq war for draining funds that could otherwise have supported childcare programs. We can expect a series of similar claims about the “crisis” that will follow “cutbacks” in aid for (pick one) the homeless, medical care for kids, or aid to the cities.

The claim that guns deny us butter is hardly a new one. During the Cold War, left-liberals often argued that if we just reallocated some small percentage of the “bloated” defense budget, we could cure all our domestic ills. Such a view was wrong then; in the post-September 11 era, it is even more misguided. The September 11 attacks had devastating economic effects, including the decimation of the airline industry and the loss of thousands of service jobs in lower Manhattan. That the economy recovered from this blow so quickly reflects not just the stimulating effects of the Bush administration’s tax cuts but—crucially—that the administration successfully re-established a national sense of security. Without such a sense, the basic functioning of a global economy is at risk. And only a functioning economy can create jobs and fund, through the taxes generated, safety-net programs and other government initiatives.

Even if we could fund ever-more government social services without jeopardizing defense spending or driving up tax rates to job-killing European levels, why would we want to? Government provision is neither the only way, nor the best, to help those in need—as Bush’s bold vision of the “ownership society” implicitly recognizes. To date, the president has defined the ownership society largely in terms of greater individual control over one’s financial affairs: pension, health care, and homeownership. As bold and powerful an approach as this is—and as historic a departure from New Deal and Great Society paternalism—its reach could extend even further. It could transform, for example, those very government-provided social programs, funded through federal billions, now cast as potential victims of the Bush priorities.

Historically, private philanthropic organizations delivered many of the social services that today government provides or funds through federal agencies like the Department of Health and Human Services. Child welfare services—running orphanages and screening foster families—were largely the work of religious organizations until well after World War II, for instance. A century ago, a network of hundreds of “settlement houses”—private philanthropies—carried out the (successful) Americanization of immigrants.

Many of the philanthropists who founded and ran such organizations dreamed that government would one day replace them and carry on their work on a grander, even universal scale—ensuring that all poor children, not just those lucky enough, say, to live near the Henry Street Settlement on New York’s Lower East Side, received free milk. The hope of reaching more people—coupled with a desire to secure a guaranteed revenue stream of taxpayer dollars—was understandable. But these earlier philanthropists didn’t anticipate what would happen when government became the chief provider: the quality of services plummeted as they became bureaucratized. Instead of model tenements for the poor, we wound up with blighted big-city public housing. State after state began to suffer from scandals of foster care—children, supported by public funds in private homes, victimized by abuse or neglect. Even worse, welfare initiatives turned out to encourage the very dependency they were supposed to alleviate. And so on.

A complete break with this old paradigm is increasingly feasible. A new generation of privately funded “social entrepreneurs” has come forward to take on tasks ranging from the education of inner-city pupils to providing homes for foster children. They have come on the scene in no small part because of their dissatisfaction over the poor job government has done. Not to be confused with leaders of advocacy organizations or interest groups, who often claim the same entrepreneurial mantle, these non-profit leaders don’t act like bureaucrats. And they encourage those whom they help to be “owners of themselves”—responsible for their own futures. Redonna Rogers of Milwaukee’s Center for Teaching Entrepreneurship, a group that teaches inner-city minority kids how to start businesses, tells her students that each must learn to be “the CEO of me.”

We shouldn’t consider it anachronistic or impractical for privately funded non-for-profit organizations to provide important social services on a large scale. After all, how many people in 2005 believe that state-owned utilities or airlines are the only way to provide electricity or travel services to the public? Well-established private organizations such as the Salvation Army and Big Brothers Big Sisters have long delivered social services on a massive scale. In recent years, Habitat for Humanity (whose founder Millard Fuller is the premier social entrepreneur of our time) has even shown that the private delivery of housing services can succeed where public housing failed. What’s more, we are entering a period when unprecedented wealth—trillions of dollars—will flow to private foundations. These foundations, if they can find the will and the ways to act in concert, will be able to provide reliable, long-term support for the social-services providers that prove most effective at helping the needy.

So far, the Bush White House hasn’t sought to de-emphasize the role of government in providing social services. It has instead pushed to add to the roster of organizations eligible for public funds—by encouraging “faith-based organizations,” for instance. No administration wants to face the charge that it has turned its back on the needy. But the faith-based initiative has itself generated lots of controversy, and there are real worries that, over time, public funding could corrupt the armies of compassion that the president has so warmly praised. In an ownership society, better to phase out the billions that the Department of Health and Human Services spends, and look instead to foundations, philanthropists, and generous citizens—allowed to keep, and creatively use, more of their money in a low-tax society—to pick the best providers of assistance for the needy.

Placing our trust in private providers of social services, financed by philanthropy rather than government, should (like individual investments in health savings or pensions) be a cornerstone of an ownership society—and an appropriate response to those who see guns as the opposite of butter.


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