The worst thing about welfare is the way people take government help when they don’t really need it.
I can’t tell you how sick I am of subsidizing the housing of people who live better than I do. I also can’t stand paying for their health care and sending their kids to college.
I think it’s time to take a hard look at some of the biggest welfare programs out there and decide if we can still afford them. I’m talking about mortgage interest deduction, tax-exempt employer-provided health insurance premiums and tuition tax advantages for the wealthy.
These programs put money in people’s pockets whether they need it or not, and, as Gov. LePage says, they take away from our ability to help the truly needy.
Of course, these programs are not what the governor has in mind when he is talking about welfare reform. On Monday, he rolled out a familiar package of bills, which would put restrictions on the use of electronic benefit transfer cards and require people who receive benefits to prove that they are looking for work. There were no surprises: This is exactly what the governor and Republicans ran on in 2014, and since they won the election, it’s hard to argue that this isn’t what Maine people want.
People hate welfare, and not just because there is some fraud in the system. Like most Americans, Mainers resent that they have to work hard while others don’t. It’s less about abuse of the system than the fact that the system exists at all.
But the same disdain does not carry over to the government programs funded by tax expenditures that are even more expensive, but invisible. As a result, the government is much bigger than even the small-government conservatives would have you believe, and a lot of people falsely think that it doesn’t do anything to make their lives better.
In 2012, researchers asked a cross-section of Americans whether they had ever benefited from a government social program.
More than half said “no.” But when they were asked about 21 specific programs, starting with “food stamps” and “welfare” and continuing to a mortgage interest deduction, employer-provided health insurance and guaranteed student loans, only 4 percent still said that they had never benefited from a single one.
And 74 percent of the people who had initially said “no” acknowledged that at some point, they had used three or more.
Let’s start with the mortgage interest deduction. It is by far the biggest subsidized housing program in the country, costing the Treasury $69.7 billion a year. (Federal vouchers for renters are a bargain, at $16 billion.)
It’s a benefit that’s extended to anyone regardless of their income. People who could afford to buy real estate with cash can borrow up to $1 million instead and deduct all of the interest, even for second homes. It’s a benefit that lower-income homeowners often can’t get because they don’t itemize deductions on their tax returns.
Another low-profile program is our government-backed health insurance system, though it’s not the one you’ve been hearing about over the last few years.
About 149 million non-elderly Americans are covered by employer-provided health insurance (compared to an estimated 9 million buying coverage through the Affordable Care Act exchanges). According to the Kaiser Family Foundation, the employer plan premiums average $6,025 a year for individuals and $16,834 for families – which is all tax-exempt, regardless of whether the employee is a dishwasher or a CEO. Paying for health care this way costs the taxpayer $250 billion a year in tax breaks, and keeps an expensive and inefficient system running without much accountability.
Higher-education tax breaks are another stealth social program that can disproportionately benefit the wealthy. While there have been countless stories about the collective size of student debt, we rarely hear about the benefits for families that can afford to pay escalating tuition without taking out loans.
They can take advantage of Coverdale or 529 accounts, which are tax free as long as the money is spent on tuition, room and board. President Obama’s American Opportunity Tax Credit for college tuition has disproportionately benefited upper-income taxpayers, with nearly a quarter of the subsidy going to those who earned between $100,000 and $180,000 (where the benefit is cut off).
People will argue that tax cuts are not spending – that the government is just letting people keep their own money – but that’s rhetoric. You can add or subtract here and there from the federal budget, but governing and defending a country this size costs a huge amount of money. Anytime someone pays less, everyone else pays more.
None of these tax expenditures are bad ideas, but putting one set of social programs in the budget and hiding another in the tax code creates a distorted view of what government does and for whom.
If we are going to talk about reforming government assistance, let’s do it. But why don’t we ever talk about all of it?
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