Trump Era May Become the 'Once-Great Society'

Much of what the new administration wants to change was built by Lyndon B. Johnson.
February 2017
Donald F. Kettl
By Donald F. Kettl  |  Columnist
Sid Richardson Professor at the LBJ School of Public Affairs at the University of Texas at Austin

The next time you drive by a nursing home, you might want to take a look inside. You’ll be staring at the front line in an emerging battle over the future of Lyndon B. Johnson’s Great Society.

If it’s a typical nursing home, Medicaid covers the expenses of half the residents. Those average $91,000 per year, because these residents need long-term care and don’t have enough assets of their own anymore to pay for it. Long-term care accounts for one out of every four Medicaid dollars. As the Trump administration pursues the Republicans’ long-sought goal of turning the program into a block grant to the states, it’s where the toughest decisions lie.

Republican governors, who now number 33, have increasingly bridled against the program’s rising costs and requirements. In most states, Medicaid is the largest and fastest-growing slice of the budget. Republican governors think they can better hold the line on costs if they have more control over the program.

Despite the lure of the strategy, how-ever, there are huge long-term risks for the states. In 2050, the American population over 65 will be twice what it is now -- and the number of seniors over 85 will triple. The costs of caring for an aging population will soar. Moreover, since most baby boomers haven’t saved enough for retirement (which will last longer, thanks to better health care), many of them are likely to need Medicaid for long-term coverage.

Moving to block grants will make it much easier for the feds to cap their share of the costs. And that will push the program’s spiraling expenses onto state budgets, which are already strained. It might seem attractive to governors now to take the block grant deal, rein in short-term costs and break free of federal rules. But the long-term prospects for the states under block grants are ominous.

That is, unless we completely rethink the promises of the Great Society. In fact, such rethinking is at the core of the Republican agenda. A reexamination is surely overdue -- long-term entitlement costs are breaking the back of federal and state budgets, and no one really likes the growing collection of rules and mandates. But the debate could lead to a slide away from the Johnson legacy, toward what might be called a “Once-Great Society.”

Do we want to shift more of the financial burden to the states? And are we prepared to accept big variations among the states in how they treat the needs of the poor and elderly?

At the same time, big questions will be coming up in debates over infrastructure. The feds once provided large direct grants to states and cities to deal with their infrastructure needs. The Trump administration plans to tackle these needs not with traditional on-budget grants but through off-budget tax breaks to support public-private partnerships. Are we capable of managing such big programs through such complex tools -- and ready for the prospect that it will be easier to raise private money to expand big airports than to attract investors to rebuild aging water systems in poor communities like Flint, Mich.?

The core issues are in play on other Great Society programs as well. The feds have backed away from discretionary federal grants for model cities. We’ve moved from a national campaign for voting rights to debates over locally rigged elections. And the frontier of civil rights is now police behavior, over which the feds have limited leverage.

So the front door of the nursing home is the opening to much more than a debate about the future of health care. It’s the entrance to a sweeping conversation about the legacy of LBJ’s governmental edifice -- which of its promises to keep, which of its strategies to change, how much inequality among the states to accept, and how the fundamental balance of power between the states and the feds might change. It’s as fundamental a debate as we’ve had in 60 years.

The Great Society programs are on borrowed time, at least as originally conceived and currently executed. The consensus among analysts of all stripes is that the entitlement programs are unsustainable. We need a new generation of approaches to deal with income inequality and break away from the stagnant wages and lack of opportunity that have trapped the middle class in the past few decades.

It’s unlikely that Americans will really want or accept a wholesale dismantling of the Great Society. It’s hard to imagine walking away from aging boomers who need long-term care -- but equally hard to imagine how millennials will be able to pay for it, given Medicaid’s current trajectory. We want much of what we have, but can’t afford it. We don’t yet know how to build programs that we can afford.

And that’s the central dilemma facing the Trump administration on the domestic front: a reset of the Great Society, finding the uneasy balance between programs we aren’t prepared to abandon and a budding ideology trying to redefine society’s promise. “Making America Great Again” will collide with the Great Society, and one of the first collisions will be inside the doors of those nursing homes.