Monday, March 05, 2012 4:39:15 PM
The invisible welfare state of the top one percent
Posted by Ezra Klein at 10:11 AM ET, 03/02/2012
http://www.washingtonpost.com/blogs/ezra-klein/post/the-invisible-welfare-state-of-the-top-one-percent/2011/08/25/gIQANQRemR_blog.html?wprss=linkset
Pop quiz: What is a government program? And are you on one right now?
According to Mettler’s survey, 60 percent of those who benefit from the home-mortgage interest deduction didn’t think they had ever used a government social program. Fifty-three percent of those with student loans didn’t think they had used one. Among Social Security beneficiaries, 44 percent thought themselves unsullied by the touch of government, and among Medicare beneficiaries, 39 percent said the same. Twenty-seven percent of those in public housing answered in the negative, as did 25 percent of those on food stamps.
[...] Then there’s what Mettler calls “the submerged state.” These policies are mostly, though not exclusively, tax breaks. They include the much-beloved home-mortgage interest deduction and the tax exclusion for employer-provided health care. Recipients of these policies — and there are tens of millions of them — are rarely cognizant that they’re benefiting from a government program.
But they are. “Indirect social policies offer benefits that are comparable to direct social benefits both in their purposes and in their costs,” Mettler and Koch write. “Both are targeted to specific groups of people, aimed to reward some kind of activity or some class of persons whom policymakers deem worthy of public support. From an accounting perspective, as well, both types have the same effect: They impose costs on the federal budget, whether incurred through fiscal obligations or lost revenues.”
The costs are significant. Huge, in fact. Tax expenditures now cost the federal government $1 trillion annually — more than Medicare and Medicaid combined. And they’re regressive.
There is also a pattern to these programs: The more a government social program benefits wealthier Americans, the less obtrusive it is. We design policies for the poor in ways that make it hard to escape the knowledge that the government is providing help. But richer Americans rely on programs that are “submerged.”
The Tax Policy Center estimates that eliminating all individual income tax expenditures would raise levies on the bottom 20 percent by $931. For the top 1 percent, the tax increase would be almost $280,000. (Notably, both President Barack Obama and Mitt Romney have talked about cutting back on tax expenditures for the wealthy, but neither has provided details.) Even so, many middle class and wealthy beneficiaries have no idea that they’re receiving any government assistance at all.
And a couple of unsurprising but important facts from the article are that if you know you’ve used government programs, you’re more likely to have a positive opinion of them. And if you’re older, such as in your 70s, and if you’re conservative politically, you’re less likely to know you’ve benefited or are currently benefiting from a government program.
Ignorance, in a too large sector of our population, is political bliss.
Posted by Ezra Klein at 10:11 AM ET, 03/02/2012
http://www.washingtonpost.com/blogs/ezra-klein/post/the-invisible-welfare-state-of-the-top-one-percent/2011/08/25/gIQANQRemR_blog.html?wprss=linkset
Pop quiz: What is a government program? And are you on one right now?
According to Mettler’s survey, 60 percent of those who benefit from the home-mortgage interest deduction didn’t think they had ever used a government social program. Fifty-three percent of those with student loans didn’t think they had used one. Among Social Security beneficiaries, 44 percent thought themselves unsullied by the touch of government, and among Medicare beneficiaries, 39 percent said the same. Twenty-seven percent of those in public housing answered in the negative, as did 25 percent of those on food stamps.
[...] Then there’s what Mettler calls “the submerged state.” These policies are mostly, though not exclusively, tax breaks. They include the much-beloved home-mortgage interest deduction and the tax exclusion for employer-provided health care. Recipients of these policies — and there are tens of millions of them — are rarely cognizant that they’re benefiting from a government program.
But they are. “Indirect social policies offer benefits that are comparable to direct social benefits both in their purposes and in their costs,” Mettler and Koch write. “Both are targeted to specific groups of people, aimed to reward some kind of activity or some class of persons whom policymakers deem worthy of public support. From an accounting perspective, as well, both types have the same effect: They impose costs on the federal budget, whether incurred through fiscal obligations or lost revenues.”
The costs are significant. Huge, in fact. Tax expenditures now cost the federal government $1 trillion annually — more than Medicare and Medicaid combined. And they’re regressive.
There is also a pattern to these programs: The more a government social program benefits wealthier Americans, the less obtrusive it is. We design policies for the poor in ways that make it hard to escape the knowledge that the government is providing help. But richer Americans rely on programs that are “submerged.”
The Tax Policy Center estimates that eliminating all individual income tax expenditures would raise levies on the bottom 20 percent by $931. For the top 1 percent, the tax increase would be almost $280,000. (Notably, both President Barack Obama and Mitt Romney have talked about cutting back on tax expenditures for the wealthy, but neither has provided details.) Even so, many middle class and wealthy beneficiaries have no idea that they’re receiving any government assistance at all.
And a couple of unsurprising but important facts from the article are that if you know you’ve used government programs, you’re more likely to have a positive opinion of them. And if you’re older, such as in your 70s, and if you’re conservative politically, you’re less likely to know you’ve benefited or are currently benefiting from a government program.
Ignorance, in a too large sector of our population, is political bliss.
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