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“Welfare For The Rich”: What If The Outrage Over Excessive Welfare Extended To The Tax Code?

Senator Jeff Sessions (R-AL) has created quite a stir with his estimates that every household below the poverty level receives an average of $168-a-day (or about $61,000-a-year) in government welfare.

Sessions’ calculations are extremely controversial and overstate the amount of government assistance for those in poverty. But for the sake of argument, let’s assume he’s right. How would $61,000 in direct government spending and refundable tax credits for the poor stack up against tax subsidies for the rich?

It isn’t even close. Indeed, my colleagues at the Tax Policy Center figure that in 2011 households making $1 million and up got that much in average tax benefits from just two deductions–for charitable gifts and state and local taxes. Add a fistful of other preferences–such as deductions for mortgage interest and exclusions such as the one for employer-sponsored health insurance– and top-bracket households got far more in tax benefits than the poor got in means-tested assistance.

These estimates exclude low tax rates on capital gains and dividends which are, arguably, very different from, say, subsidies for mortgage interest or employer-sponsored health insurance. If you include preferential rates on investment income, households making $1 million or more got an additional $119,000 in tax benefits, on average, in 2011.

Keep in mind that tax rates on ordinary income were relatively low in 2011. Now that the rate for high-income households has gone up significantly, their tax subsidies will be even more generous.

I readily admit that on one level, this is a fairly silly exercise. But there is an important point here: In much public discourse, direct government aid for the poor is easily dismissed by the pejorative “welfare.” Yet, spending-like subsidies administered through the revenue code provoke far less outrage. This is true even though many of these tax preferences are economically indistinguishable from direct spending and often add far more to the deficit.

Take housing, for instance. CBO figures that the lowest-income 20 percent of households get an average of about $1,100-a-year in means-tested rental housing assistance. TPC estimates that the lowest-income households got no benefit from tax deductions for mortgage interest and real estate taxes in 2011. But those in the top 20 percent, who make more than $100,000, got an average tax benefit of $2,900. Those in the top 1 percent, who make an average of $1.5 million, did even better. They got an average tax break of $5,700, more than five times the benefit the government provided low-income renters.

As with so much of the tax code, these homeowner tax benefits are upside down. On average, the more you make, the more you get. This seems an odd design in an era when fiscal restraint is all the rage. Yet politicians still recoil when tax expenditures—the vast bulk of which go to middle-class and high-income households—are described as subsidies.

In recent years, both Democrats and Republicans (including their recent presidential candidates) did talk about capping or limiting tax preferences for the highest income households. But so far, at least, that talk has come to nothing. It would be helpful if Sen. Sessions directed some of his outrage to the more than $1 trillion in tax expenditures that litter the revenue code—much of which go to those who need help the least.


By: Howard Gleckman, Tax Policy Center, February 26, 2013

March 4, 2013 Posted by | Economic Inequality, Tax Loopholes | , , , , , , , | 1 Comment

“A Hot New Republican Lie”: The Government Spends More On Welfare Than Everything Else

You are probably going to start hearing a hot new lie from Republicans soon: The government spends more money on welfare than on anything else, even the military!

This is apparently the conclusion of a new report from the nonpartisan Congressional Research Service (the same organization that recently said that Obama’s supposed “welfare reform gutting” was totally legal!), though in fact it is a claim made by Senate Republicans who are abusing the nonpartisan research of the CRS. Here’s the story in the Weekly Standard, complete with charts from the Republicans on the Senate Budget Committee. Here’s the story in the Daily Caller, which is more upfront about all the material coming from Senate Republicans and not from the CRS. And here’s a Weekly Standard follow-up with some new charts.

They claim that “welfare spending” is the “largest budget item” for the federal government, with the fed spending $745.84 billion, more than is spent on Social Security, Medicare and “non-war defense.” (Hah.) Plus: “In all, the U.S. government, including federal and state governments, spends in excess of $1 trillion on welfare.”

That is a lot of welfare spending! Those poor people must be rolling in dough, right?

In the context of political discussions, “welfare” traditionally (as in pretty much always) refers specifically to Temporary Assistance for Needy Families, or TANF, the federal program that was created in 1996 to replace the Aid to Families With Dependent Children program — also known as “welfare” — that had existed since the New Deal. This is what people refer to when they say “welfare caseloads” and “welfare rolls,” and when conservatives accuse Obama of gutting “welfare reform” they are referring to TANF. The federal government spends $16.5 billion a year on TANF and, combined, the states spend another $10 billion.

Most of the federal budget is “defense” and war spending and Medicare, which should be common knowledge but that fact is regularly obscured by right-wingers who claim to be deficit hawks but refuse to cut defense spending and are scared of proposing real reductions to our programs for old people. This is how you get poll results where people think most of what the federal government spends money on is “foreign aid” and public broadcasting. So this is obviously just an attempt to rebrand “everything else” as “welfare.”

(On a state level, the majority of money goes, unsurprisingly, to healthcare and education. Less is spent on actual “public assistance” than is spent on prisons.)

The con is pretty easy to see when you read the actual CRS report. Senate Republicans are counting 83 separate (and wildly different) programs as “welfare” in order to make the case that the government is spending more on poor people than old people. The majority of this money is Medicaid and CHIP, which are healthcare spending, which is increasing for the same reason that Medicare spending is increasing, which is that healthcare costs are increasing. (And Medicaid is much less generous than Medicare, because it is a program for poor people, not old people.) But so many other things now also count as welfare, including Pell Grants, public works spending, Head Start, child support enforcement, the Child Tax Credit, Foster Care assistance, housing for old people, and much more. They’re also counting the Earned Income Tax Credit, which is, traditionally, the form of “welfare” that conservative Republicans actually support. Basically, all social spending (though specifically not spending on rich old people or on healthcare for veterans with service-related disabilities, which Republicans requested be excluded from the CRS report) now counts as “welfare.”

So we’ve learned that when you count everything — especially Medicaid and CHIP — as “welfare,” it is easy to make it look like “welfare” is very expensive, because healthcare is very expensive. This dumb lie will live forever, and you will hear until the end of your days that “the government spends more on welfare than it does on defense.”


By: Alex Pareene, Salon, October 18, 2012

October 19, 2012 Posted by | Election 2012, Senate | , , , , , , , | 1 Comment

“Where’s The Data?”: Paul Ryan Claims 30 Percent Of America Happy To Freeload

One of the more enduring ‘knocks’ on the candidacy of Mitt Romney is that he incorrectly views many of those who are in need of government provided assistance as being people who prefer to live life at the expense of the taxpayer rather than pursue a more meaningful existence of hard work and self-sufficiency.

Whether this perspective on Romney is fair or unfair, most would agree that the GOP standard bearer’s now infamous 47% speech—delivered at a Boca Raton fundraiser—has done little to dispel this meme as we head in to the dwindling days of the 2012 presidential campaign.

Now, Romney’s running mate, Congressman Paul Ryan, has weighed in with his own assessment of what drives a significant portion of the American public—and it’s not pretty.

Speaking at the annual American Spectator Robert L. Bartley Gala Dinner in November of 2011, Ryan had this to say-

“Today, 70 percent of Americans get more benefits from the federal government in dollar value than they pay back in taxes. So you could argue that we’re already past that [moral] tipping point. The good news is survey after survey, poll after poll, still shows that we are a center-right 70-30 country. Seventy percent of Americans want the American dream. They believe in the American idea. Only 30 percent want their welfare state. What that tells us is at least half of those people who are currently in that category are there not of their wish or their will.”

While it is certainly interesting that Ryan predicates his remarks on the belief that one who does not self-identify as “right of center” necessarily opposes the the American dream, leaving it to follow that such an individual would prefer to allow the government to pay for his or her existence (quite a stretch by any reasonable standard), what most interested me about Ryan’s address was the source for his assumptions.

Who says that America is a center-right nation by a 70-30 margin? And if that is the basis of Ryan’s calculations in determining how many of us prefer the welfare state to hard work, wouldn’t a source for such a claim be appropriate?

As I simply could not recall there being any such ‘survey after survey’ and ‘poll after poll’ that would support Congressman Ryan’s conclusions, it struck me as a worthwhile venture to go looking for the same.

Bearing in mind that the Ryan address was given November of 2011—and wanting to be fair to Congressman Ryan—I went off in search of any poll conducted within a reasonable window of the time frame of Ryan’s address that might support his allegations.

I found that virtually every single one of the major polls conducted in the nation during the months leading up to Ryan’s speech revealed that the overwhelming majority of Americans (64.5 percent when the polls are averaged) believed we should be raising taxes to help cut into the deficit—an odd conclusion in a nation so heavily slanted to the right of center as claimed by Mr. Ryan.

I found that the Gallup Poll conducted on September 20th of 2011 revealed that 70% of Americans wanted to increase taxes on corporations by eliminating certain tax deductions the public believed to be unfair. The same poll also discovered that Americans widely supported the jobs plan that President Obama sent to Congress where it failed thanks to Congressman Ryan and his cohorts.

Again, a shocking result if we are to believe Ryan’s assessment that seven out of ten Americans are committed to the very ideology that Ryan professes to be his own.

I found a CBS/New York Times poll conducted just a few months before Ryan’s speech reporting that 72 percent of those polled disapproved of the way his party handled the default crisis.

And in a Time Magazine poll conducted less than one month before Ryan’s labeling 30 percent of our fellow Americans to be a bunch of bums, 79 percent of the public believed that the gap between the rich and the poor had grown too large, 86 percent believed that Wall Street and its lobbyists have far too much to say about what happens in Washington and a majority of Americans supported the Occupy Wall Street movement.

Do you know what I could not find?

Not so much as one survey or poll suggesting that the United States is a right-of–center electorate by a margin of 70-30 or that 30 percent of the public is content to live their lives courtesy of the United States government with no interest or desire in taking control of their own support and sustenance if given the chance.

While it might not be forgivable, it would at least be understandable had Ryan made this speech in the heat of a campaign where he has proven himself willing to say or do just about anything to solidify his base. However, these comments were made well before Congressman Ryan was chosen for the GOP ticket. Thus, it seems reasonable to accept that this is either what Mr. Ryan believes or what he thinks he can sell—despite an apparent lack of any evidence whatsoever to support so shrill and offensive a claim.

Congressman Ryan owes us some authority for his remarks. If these polls and surveys exist, his campaign should make them available to us.

Otherwise, Paul Ryan—a man whose own living has long come solely at the expense of the American taxpayer—is simply making this stuff up out of whole cloth and, in the process, deeply offending the millions of Americans who want more than anything to find work and get ahead but are struggling to do so.

Talk about being out of touch….


By: Rick Ungar, Contributor, Forbes, October 3, 2012

October 4, 2012 Posted by | Election 2012 | , , , , , , , , | 1 Comment

The GOP’s Peculiar Vocabulary Of Race

If Rick Santorum is upset that pretty much nobody believed him when he said he wasn’t talking about “black people” living off “somebody else’s money,” he has Newt Gingrich to blame. A day after the GOP’s flavor of the week changed stories and claimed, “I didn’t say black,” when he said,  “I don’t want to make [something sounding like black] people’s lives better by giving them somebody else’s money,” Gingrich again called President Obama “the food stamp president.” He told reporters in New Hampshire, “I will go to the NAACP convention and tell the African-American community why they should demand paychecks instead of food stamps.”

On Thursday I performed the mental exercise of giving Santorum the benefit of the doubt, and laid out the way the GOP’s ’60s era rhetoric about “welfare queens” and “welfare cheats” has been updated to include much of the multiracial working class, including whites – including anyone who has a public sector job, a union-protected job, or collects unemployment, Social Security or Medicare. It seemed theoretically possible – while still hard to believe – that Santorum was merely sharing the new GOP line that we’re all welfare queens now, any of us who’ve ever benefited from a government program.

Then Gingrich made my thought exercise seem unduly kind, by demonstrating exactly why people should be inclined to distrust Santorum’s new story and believe he was talking about black people: The modern GOP seems unashamed of its prejudice.

It’s impossible not to believe that having our first black president unleashed a new round of GOP race-baiting, even leaving birtherism aside. In August, one of Obama’s few Republican friends, Sen. Tom Coburn, lapsed into shameful racial stereotyping trying to “defend” the president, telling an Oklahoma constituent that Obama’s “intent is not to destroy … It’s to create dependency because it worked so well for him … As an African-American male, coming through the progress of everything he experienced, he got tremendous benefit through a lot of these programs.” A black guy raised by a (white) single mother gets into Harvard Law School: In the everyday vocabulary of today’s Republican Party, he’s looking for a handout.

Ronald Reagan wrapped up the ugly racism of earlier Republicans in pretty paper when he claimed, “We fought a war on poverty, and poverty won,” and made the case that welfare — which he associated with Democrats — created “dependency” that harmed its recipients. You didn’t have to be angry or racist anymore to oppose welfare programs; you could say you were trying to help their recipients. Reagan also muted the rhetoric that associated welfare with race, at least a little. More than 30 years later, having a black president makes it seem safe, and necessary, to unwrap Reagan’s pretty paper and once again make plain the GOP’s political association between welfare and African-Americans.  Make that, having a black Democratic president. This wouldn’t happen to President Herman Cain, would it?


By: Joan Walsh, Editor at Large, Salon, January 6, 2012

January 7, 2012 Posted by | GOP Presidential Candidates | , , , , , , , , | Leave a comment

Gov Rick Scott: When Bad Governors Try Bad Ideas

Florida Gov. Rick Scott (R) came up with an idea he considered pretty clever. First, he told Floridians that people on welfare were more likely to be drug addicts. What did Scott base this on? Nothing in particular — he seemed to just make it up — but Scott was quite fond of the argument.

Second, the governor approved a policy based on his faulty assumptions: those who apply for welfare benefits will have to pass a state-mandated drug test. How’s that working out? Not well.

Since the state began testing welfare applicants for drugs in July, about 2 percent have tested positive, preliminary data shows.

Ninety-six percent proved to be drug free — leaving the state on the hook to reimburse the cost of their tests.

As part of the Scott administration policy, those applying for benefits have to pay a $30 out-of-pocket fee to pay for the drug test. If they pass, Florida reimburses them.

And while the state saves some money by not making benefits available to those 2% who fail the test, Florida is forced to reimburse everyone else, plus pay for staff and administrative costs for the drug-testing program, plus pay the legal fees associated with the likely court challenge.

This really wasn’t a great idea.

I’d also note for context that Rick Scott’s drug-testing policy is limited to low-income Floridians needing temporary aid. It doesn’t, in other words, apply to everyone seeking public funding — only the poor, who the governor assumes are probably drug-addicts.

And speaking of the nation’s worst governor, remember the $2.4 billion Florida was set to receive for high-speed rail? The project that enjoyed bipartisan support and was going to create tens of thousands of jobs? With Scott rejecting the funding, the money has now been officially reallocated for rail upgrades in the Northeast, high-speed rail in the Midwest, and related projects in California.

Florida’s unemployment rate is only 10.7%. It’s not like the state needed the boost.


By: Steve Benen, Contributing Writer, Washington Monthly Political Animal, August 26, 2011

August 27, 2011 Posted by | Class Warfare, Conservatives, Democracy, Economy, Elections, Equal Rights, GOP, Gov Rick Scott, Governors, Ideologues, Ideology, Income Gap, Jobs, Lawmakers, Middle Class, Politics, Public, Republicans, Right Wing, State Legislatures, States, Teaparty, Unemployment, Wealthy | , , , , , , , | Leave a comment

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