Perhaps no catchphrase is as important in understanding how liberal policy wonks think as, “Programs for the poor are poor programs.” The central insight is simple. We live in a democracy. Programs that benefit a large group of people, and especially a large, politically active, group of people, are less likely to be cut than ones that only benefit a smaller group of people, especially if that group is less politically involved. Those living under the poverty line make up a far bigger group than they should—15.1 percent of the population at last counting—but that’s far from enough to form a durable base of support for spending programs, especially when poor people are less likely to vote or otherwise participate in the political process.
One can think of numerous examples of this principle playing out. Programs that directly target poor people—Medicaid, food stamps, welfare, and so forth—tend to be the first to get cut when states or the federal government want to tighten their belts. By contrast, large programs which help the poor the most but also give substantial aid to the middle class—Social Security and Medicare are the best examples—are politically untouchable most of the time. The implication for liberals is clear. It may not make sense, as a matter of justice, for the government to be using the regressive Social Security payroll tax to send money to a retiree with millions in savings,but if doing so preserves the program for those who truly need it, it is a fair trade.
But a funny thing has happened this year. Suddenly, big, universal entitlement programs aren’t safe. The change started in 2010, when President Obama signed health care reform into law. That proposal finances large health insurance subsidies, mostly for low-income people, in part by cutting Medicare spending. But the trend intensified after the midterms, when it became clear that Republicans were going to demand big cuts in government spending. And because Social Security and Medicare make up over a third of the annual federal budget—and Medicare will make up more as health care spending continues to rise—big cuts mean cuts to them.
The Obama administration showed a remarkable willingness to entertain entitlement cuts, even offering to increase the retirement age for Medicare during the debt limit talks this past summer. That measure, one of the more regressive possible ways to cut the program, thankfully did not make it into the final deal, but what did is still illustrative. Now that the supercommittee has failed, a two percent across-the-board cut in Medicare payments to doctors is set to take effect. By comparison, the traditional whipping boys of the budget process—food stamps, Medicaid, and other programs targeted at the poor—are exempted from cuts. It’s clear that even universal programs are now vulnerable.
If universal programs aren’t safe anymore, what is? The answer, perplexingly, is spending that happens to occur through the tax code. The government has hundreds of billions of dollars a year of expenses that take the form of personal income tax deductions. Much of this spending is ill-advised: the mortgage interest deduction is regressive and helped fuel the housing bubble, the charitable deduction almost exclusively helps the rich, and the health insurance deduction has made it harder for people to move between jobs by making them depend on their employers for health insurance.
But because the spending happens to be implemented in the tax code, no Republican will dare cut it. In recent “supercommittee” negotiations, the most Republicans would concede on taxes is a reversal of the deduction for owners of corporate jets; anything more popular than that was untouchable when not combined with big cuts for the rich. What’s more, America’s most successful anti-poverty program, the Earned Income Tax Credit, is a tax measure whose invulnerability to cuts defies the “programs for the poor are poor programs” maxim, as political scientist Christopher Howard has noted.
This is not to say that Republicans will initially support expanding the welfare state through the tax code (though daring them to vote against tax breaks could be fun). But it does suggest that putting welfare spending in the tax code is the way to make it politically durable. The simplest way would be to enact a negative income tax, under which all Americans would be given a lump sum and then taxed progressively, such that the rich have to pay this amount back and then some. This would simplify welfare programs as well as make them less paternalistic by giving the poor more freedom to spend on what they like instead of prescribed goods like housing or food.
I’m not optimistic that major progressive initiatives like this will be implemented anytime soon. But when they are, they should be built to last. In the current political climate, “built to last” means “built into the tax code.”
Dylan R. Matthews ’12, a Crimson editorial writer, is a social studies concentrator in Kirkland House. His column appears on alternate Wednesdays.
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