Who benefits from government social programs

Apparently it isn't just those slackers on food stamps.


Middle-Class Welfare State Is Invisible by Design: Ezra Klein
By Ezra Klein - Feb 29, 2012

What is a government program? And are you on one right now? Those are the questions Cornell University political scientist Suzanne Mettler has been posing.

For her book “The Submerged State,” she asked a scientifically selected sample of 1,400 Americans whether they had ever used a government social program. Only 43 percent copped to having done so. Then she read off 21 social programs, such as Medicare (FFSOMED) and the home-mortgage interest deduction, and asked the same question again: Have you ever used a government social program? This time, 96 percent said yes, in fact, they had.

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.

The implication seemed to be that Americans are hypocrites, or at least woefully uninformed. But in forthcoming research, Mettler and co-author Julianna Koch dig deeper, and find the reality is more complicated.

Their new paper argues that “policy design” is an important determinant of whether people recognize they’re using a government program or not. Some programs, like food stamps and Medicaid (USBOMDCA), force recipients to go to a government office and apply for them. Those are the programs that beneficiaries are most likely to recognize as government social programs.

Other programs, like Medicare, are provided by the government, but eligibility is mostly automatic, and recipients have paid into them. Beneficiaries of such programs are somewhat less likely to realize they’re on a government dole than beneficiaries of means-tested programs.

Submerged State

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.

Political Stratification

Not surprisingly, this influences Americans’ attitudes toward government. Mettler and Koch find that the more likely you are to know you have used a government program, the more likely you are to have a positive opinion of them. “These results point to an important but previously overlooked form of stratification in American politics,” they write, “in which some citizens are made cognizant of governments’ role, but others -- although they too benefit from it -- are not.”

Other factors influence whether people think they’ve used a government social program. All else being equal, a 75-year-old is 28 percent more likely than a 30-year-old to say he has never used a government program; a conservative is 50 percent more likely than a liberal to say the same.

Mettler hypothesizes that such differences could play a role in the nation’s growing political divide. “I think one of the drivers of the kind of polarization we have today is policy design and delivery, because we have these policies where people can benefit a lot from the government but become more anti- government because they’re paying higher taxes and don’t think they’re getting benefits.”

I’m more worried about the role submerged policies play in the budget and in good policy. We’re funneling an enormous amount of money to people who, in many cases, don’t need it and don’t even know they’re receiving it. We’re designing programs to be hidden in the annual budget -- tax expenditures don’t show up as spending, even though that’s what they are -- and invisible to taxpayers. That’s economically inefficient and politically problematic.

If Americans who either rent or own their homes outright were asked to accept a tax increase of $150 billion in order to subsidize the mortgage payments of their indebted friends, it seems unlikely they would find that appealing. The same goes for asking Americans who don’t get health insurance through their work to spend $100 billion or so annually subsidizing the benefits for those who do. Of course, that’s exactly what’s happening right now, but it’s hidden in the tax code, so most Americans don’t know it and can’t protest it.

It is in part because these policies aren’t visible that they’re so difficult to change. That’s the thing about submerging a large part of your welfare state. Sink it deep enough, and it becomes almost impossible to dredge up.

(Ezra Klein is a Bloomberg View columnist. The opinions expressed are his own.)

 

Nice article Bruce... I greatly appreciate our American Veterans and couldn't help thinking how many of guys that I know (hundreds) and who are retired and getting VA checks are so outspoken against other Americans receiving help through government programs. Its funny how few of them see that their own benefits are coming from the government. I sometimes get a little disturbed by the abuse of the VA that only gets winked at.

 

So Muzzy, are you saying that retired and disabled veterans are on some kind of social welfare program and collecting benefits they did not earn?

 

I know a woman that got out of the air force after 4 years and receives a disability check for acne.

 

Would like to know who did her rating. I had to argue for my right shoulder that was blown out on active duty and will never be better than 60%.

 

No sir, I am not. Thank you for your honest service. I am saying (and I work around a lot of retired military guys) that there are many who begrudge tax dollars going to anyone but them. I know many who run to the VA for every little ailment to try to get their VA benefits adjusted for normal aging related ailments. If you get hurt doing your job in the military, that's one matter. If you discover you have developed skin cancer at 70 years old because you laid out on beach in Hawaii for 5 years with no shirt on... that's another matter. I even know a couple who have gone to the VA claiming they have hearing damage and have been given hearing aids by the VA and the only time they wear them is when they go to the doctor. And they openly and proudly talk about it like they have beat the system. I know a lady who was medically discharged after 2 years for obesity related diabetes that is now drawing a pension at 25 years old. It is a racket for those who abuse it and for them it is exactly what you said; a social program. I know another who served for less than 2 years and supposedly blew out his knee on active duty. He water-skis in the summer.

 

I met a guy a few years ago who bragged about how he was fleecing the VA. While sitting around the campfire he recanted how he was on 100% disability for lower back injuries he told the VA he got while on active duty. The next day while he was dragging a deer out of the woods, he was caught on videotape by another member of the party. When the guy who videotaped sent out the cd's with the video, mine accidently got sent to the VA. He lost his disability and his house when he didn't pay back the benefits he had already received with 3% interest. Last time I saw him, he was blaming the government for his woes. I admit there are arses out there that scam the government just like others do workmen's comp and social security disability and makes it bad for everyone else.

 

We are in total agreement my friend... total! Glad he got busted... now if we could just do the same with congress

 

I was looking at some apps for a job and I was able to review the vets and what they received disability for and all I can say is, you would be amazed.

 

from the sounds of it, "sickened" might be more appropriate than "amazed".

 

I agree but some of these folks don't even think they are scamming the gov. They think they deserve this money and yet, like Muzzy Man says, they will be the first to complain about others receiving a government benefit. That is the reason I posted the article to begin with. You read a lot of complaints about people that receive gov benefits and yet the complainers are receiving them too and sometimes more.

 

Yes, even better.

 

Amazed?... More like Nauseous!

 

Bruce, serious question here. Do you consider taking a federal tax deduction on interest you have paid on a home mortgage to be the same as participating in a social welfare program?

Fine if you do, but in my opinion they are world's apart. The homeowner is also paying local property taxes on that home, paying their own utilities (which include taxes), maintenance (including sales tax), insurance, and income taxes. I can also be taxed on the capital gaines if I sell the home. Am I missing something here?

 

I consider it benefitting monetarily from a government program. It is not a social welfare program but it still allows someone to benefit monetarily from a government program.

 

I can take a federal tax deduction for childcare expenses. Would that be considered as participating in a social welfare program?

 

Well, in a sense, we are all participating... but you're still paying your taxes, only at a slightly lower rate. The government benefits because spouses may continue working and continue paying taxes instead of becoming stay at home moms. It becomes IMO "social welfare" when you receive where you have not invested or receive more than you have invested. Social engineering may be at work here, but that would require a different level of discussion.

 

Isn't that true with medicare and social security?

 

Probably so... I am just not sure how well the current plan is working. I sure hope we never become a society that doesn't value, honor and care for the elderly, widows and orphans.

 

I personally believe that welfare should be limited. I know of people who are 3rd and 4th generation welfare recipients. They've never held a legitimate job in their life and will tell you to your face that they have a job taking care of their children and are paid by the government to do so. Welfare was started as a temporary stop gap measure to help women and children who lost their husbands in WWII get back on their feet. But like every other government assistance program (i.e. food stamps, medicaid, SSI, etc), there are those who find loopholes to bilk the taxpayers. Food stamps cost taxpayers $360 million a year which is a drop in the bucket compared to the $15,000,000,000.00 (yep, 15 billion) that the Aid for Dependent Children costs. Medicaid tops the burden with $333,000,000,000.00 per year.
Other programs like social security and medicare are at least investment based in that taxpayers who become eligible for these programs have paid into them. With inflation, they may receive more in benefits than they paid in.