Inequities of social spending

The Government-Citizen Disconnect

By Suzanne Mettler
Russell Sage Foundation

From Chapter 1 – A Time of Contradiction

Over the past four decades, Americans’ relationship to the federal government has evolved in a deeply paradoxical manner. As a society, we appear to regard government with ever greater disdain, as evidenced by popular discourse, numerous polls, and election results. Yet people depend on the federal government more than ever to help them attain economic security, health care and educational opportunity.

Yet over these very same decades, Americans have increasingly counted on the federal government’s assistance in their personal lives. Nationwide, the share of the average citizen’s income that flows from federal social “transfers” – including Social Security, food stamps, the Earned Income Tax Credit (EITC), and more than forty other programs – increased from 7 percent in 1969 to 17 percent in 2014. On a per capita basis, the rate grew fairly steadily over time, escalated more quickly with the onset of the 2008 financial downturn, and then declined somewhat more recently. The amount received by the average person increased from $1,853 in 1969 to $7,729 in 2014, in 2014 dollars.

These figures do not include the most generous social benefits, which are either channeled through the tax code, such as home mortgage interest deduction, or provided in tandem with private organizations, such as tax-subsidized, employer-provided health and retirement benefits. These policies serve the same function as social benefits delivered as direct payments or services – such as helping families to afford health care, housing, or education – but in permitting beneficiaries simply to pay less in taxes, they differ in design. If we consider only public social spending or government transfers, the U.S. welfare state is smaller as a percentage of GDP than that of other affluent nations, ranking twenty-fourth worldwide, but if we account also for the social expenditures channeled through the tax code and tax-subsidized payments from employers, the United States has the second largest welfare state in the world after France.

From Chapter 3 – We Are All Beneficiaries

Sheila Turner, who was born in 1973, is a self-described “stay-at-home-mom” who lives in Dallas, Texas, in a middle-income household. She considers herself to be extremely conservative on politics and identifies with the Republican Party. When asked what she thinks of when she hears the term “government social programs,” she says, “Giving money to those who don’t want to work.” Her views of such programs are “mostly negative,” she reports, because they provide support for “people who don’t prioritize their budgets and pay for their (own) bills.” She believes that “government does a poor job of managing things,” and that “people should provide for themselves.”

Yet Turner readily acknowledges that her family has used several specific policies. Her daughter used financial aid to attend college, both Pell Grants and student loans. Her husband used Unemployment Insurance for several months while unemployed, about which she comments, “Every little bit helps when you have no income.” She and her family have also utilized several features of the tax code, including the EITC, the home mortgage interest deduction, and the tax-free status of employer-provided health and retirement benefits. She does not view these tax expenditures as government social benefits, but rather as incentives for making certain decisions, explaining, “They give people a reward for using their money the right way”

American rhetoric about government benefits implies that we are a deeply divided nation of “us” and “them,” the deserving and the undeserving. Yet the evidence tells a different story. When we consider individual Americans across different incomes, parties, and ages, nearly all have used social benefits, and although usage patterns vary, particularly with respect to policy types, the commonalities loom larger than the differences. Similarly, when we consider Americans with respect to the communities across the country where they live, whether rich or poor, they are far more likely to use more such benefits today than Americans did thirty-five years ago. We nearly all benefit from the federal government’s social policies, and we nearly all contribute to those policies. whether through payroll taxes, income taxes, or both.

Percentage of Americans Who Report Having Ever Used Specific Social Policies:

55.3 – Employer-provided retirement (current only)
49.9 – Employer-provided health care (current only)
45.6 – Home mortgage interest deduction
38.5 – Unemployment insurance
34.4 – Earned Income Tax Credit
27.4 – Student loans
25.7 – Child and Dependent Care Tax Credit
25.4 – Food stamps
22.2 – Medicare
17.5 – Medicaid
16.0 – Pell Grants
15.8 – Social Security – retirement and survivors’
13.9 – Welfare/public assistance
10.0 – Hope or Lifetime Learning Tax Credit
9.7 – Social Security Disability Insurance
8.7 – Government-subsidized housing
8.1 – Supplemental Security Income
8.0 – Head Start
5.9 – GI Bill
5.1 – 529 plan or Coverdell Education Savings Account
4.6 – Veterans’ benefits (other than GI Bill)

From Chapter 4 – Different Lenses

In sum, when Americans think about government, only in some instances does their memory of the social policies they have benefited from hover at the top of their minds. As a result, the strong antigovernment attitudes that prevail in the United States today can be found even among many people who themselves have benefited a great deal from social policies. These views may attract Americans to candidates and organizations that articulate such views, even if they hold positions that threaten the very policies from which individuals have benefited.

From Chapter 5 – Unequal Voice

How is it that the nation has shifted to electing more officials who want to undermine social policies at the very same time as citizens depend on them more than before? The answer is in part for reasons we saw in chapter 4, that many Americans use benefits that make government’s role less than apparent, and that when they evaluate government, other considerations and affiliations loom more heavily in their minds than their social policy experiences. But it is also a matter of who shows up to participate in political activity. Those who have benefited from more visible government programs are both more aware of the role that government has played in their lives and more supportive of social spending. Yet they tend to participate less than other Americans, for reasons related to their socioeconomic status and also because candidates, parties, and groups do less to mobilize them and involve them. As a result, their voices are less likely to be heard in the political process, which meanwhile overrepresents those who are less aware that government has made a difference for them. The American polity is skewed by a participatory tilt that exaggerates the views of those who remain incognizant of government’s role in their lives and drowns out those of others. But it does not have to be this way.

From Chapter 6 – Reconnecting Citizens and Government

Although the United States has nevertheless increased the extent to which it provides economic security and educational opportunity to citizens, many Americans who are beneficiaries of these policies do not perceive government to be responsive to them. This conundrum amounts to a government-citizen disconnect.

Policy designs do not speak for themselves in communicating the value of government. Even if appealing internet tools and other procedures help citizens make sense of how government has helped them and their families over time, the impact on assessments of government may still be minimal. In our highly polarized polity, where organizational linkages that connect citizens and government have frayed and some groups beat the antigovernment drum, more is needed. Organizations that seek to strengthen democracy must step up to play these roles, making connections for citizens and drawing them into politics when the fate of policies is at stake. They can do so effectively by developing activists, including individuals from communities that are usually excluded from civic engagement. In the process, they can help people see how government matters in their lives – through social policies like those examined here as well as through others – and spur their involvement in the political process.

As Americans face the future, far more unites us than divides us. We are not a nation of moochers and takers. Rather, we are a political community, one built on respect for the ideas that all are created equal and that “we the people’ can govern ourselves. We can advance by honoring our reciprocal obligations to each other through the bonds of citizenship. By reaffirming that quest, we can carry on together, as citizens of a democracy.

Suzanne Mettler is Clinton Rossiter Professor of American Institutions in the Government Department at Cornell University.…

Because much of our social spending is not transparent, most people do not realize just how much they benefit from these government social policies. Those who benefit the most, especially though tax expenditures (tax deductibility of retirement plans, health plans, home mortgage interest, etc.), frequently do not consider the government’s largess accruing to their benefit as a government social program, yet they are resentful when others of lesser means receive more visible support to meet basic needs such as food stamps, unemployment benefits, public assistance, or Medicaid.

Yet the opaque social benefits the wealthy receive to help pay for their large mortgages, generous retirement plans or executive health benefit programs are frequently much more than the person with the food stamps at the super market checkout stand is receiving. Further, there is a prevailing attitude that somehow the person working at a job with poverty-level wages is not deserving of a government handout, whereas the very wealthy individual has somehow earned, as a reward, much greater benefits through tax expenditures, which is still a government handout, but for the rich.

It seems that we could inject a much greater dose of fairness into our social spending programs, and this is where health care financing enters the scene. Everyone should have health care, and they could if we used progressive tax policies to fund an equitable universal system such as an improved Medicare that covered everyone. If the system already existed, the rich would not be resentful of poor people getting the health care that they need. At least the rich don’t seem to be so in other nations that have equitable, universal systems.

We really could have the same here, but we’re going to have to acknowledge that we must change our attitude that low-income workers are not deserving of support for basic needs while the rich are entitled to tax expenditures to support their more extravagant lifestyles.

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Source: Finance Solidaire
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