I have made the mistake of peeking at the NY Times headline story before the caffeine has kicked in fully. Thier gist seems to be that the "less government" crowd is a bunch of hypocrites, but there is a glaring problem with their numbers. Or at least, I am glaring - here we go:
Even Critics of Safety Net Increasingly Depend on It
LINDSTROM, Minn. — Ki Gulbranson owns a logo apparel shop, deals in jewelry on the side and referees youth soccer games. He makes about $39,000 a year and wants you to know that he does not need any help from the federal government.
He says that too many Americans lean on taxpayers rather than living within their means. He supports politicians who promise to cut government spending. In 2010, he printed T-shirts for the Tea Party campaign of a neighbor, Chip Cravaack, who ousted this region’s long-serving Democratic congressman.
Yet this year, as in each of the past three years, Mr. Gulbranson, 57, is counting on a payment of several thousand dollars from the federal government, a subsidy for working families called the earned-income tax credit. He has signed up his three school-age children to eat free breakfast and lunch at federal expense. And Medicare paid for his mother, 88, to have hip surgery twice.
Wait - Medicare is now a "safety net" program? I thought that, like Social Security, it was an earned benefit - we all paid our taxes, and we are all eligible. Medicaid is means-tested; Medicare is not.
Pressing on, this problem re-emerges quickly:
There is little poverty here in Chisago County, northeast of Minneapolis, where cheap housing for commuters is gradually replacing farmland. But Mr. Gulbranson and many other residents who describe themselves as self-sufficient members of the American middle class and as opponents of government largess are drawing more deeply on that government with each passing year.
Dozens of benefits programs provided an average of $6,583 for each man, woman and child in the county in 2009, a 69 percent increase from 2000 after adjusting for inflation. In Chisago, and across the nation, the government now provides almost $1 in benefits for every $4 in other income.
The reporters addressed my question in the next paragraph, so my aneurysm subsided:
Older people get most of the benefits, primarily through Social Security and Medicare, but aid for the rest of the population has increased about as quickly through programs for the disabled, the unemployed, veterans and children.
So if most of the benefits are for a non-safety net program, why are we reading about it? The fog thickens here:
The government safety net was created to keep Americans from abject poverty, but the poorest households no longer receive a majority of government benefits. A secondary mission has gradually become primary: maintaining the middle class from childhood through retirement. The share of benefits flowing to the least affluent households, the bottom fifth, has declined from 54 percent in 1979 to 36 percent in 2007, according to a Congressional Budget Office analysis published last year.
Well I need to track down that CBO analysis, because if it is counting Social Security and Medicare then no kidding - the aging baby boom is undoubtedly hoovering up a larger share of benefits in 2007 than in 1979 [the obvious is true - see UPDATE]. That tells me nothing about, for example, the impact of the 1996 welfare reform, but it makes a great story for the Ministry of Truth.
IF I MAKE IT BACK... Eventually I hope to develop two points - first, the Democrats have long wanted to deliver middle-class entitlements paid for by "the rich", because that is where the votes are. Healthcare and college subsidies are two biggies for them.
Secondly, someone (IIRC, Ms. McArdle herself) had a cogent post noting that what looks like a safety net on the way down can look like absurdly high marginal tax rates on the way back up. If someone falls from $40,000 to $20,000 in income and picks up $15,000 in benefits on the way down they (presumably) lose those benefits as their situation improves. That creates a high effective rate and greatly reduces the incentive to get back to work.
One solution has been to move the cut-offs and break points up into middle class territory, which of course leads to the sort of headlines the Times delivers today.
UPDATE: From Sally Pipes of Forbes, last December:
The Congressional Budget Office just released a major new investigation into household income trends over the last three decades. Researchers found that while the total amount of benefits paid out by government social safety-net programs rose between 1979 and 2007, the share going to the poor actually shrank.
In other words, relatively affluent members of American society now consume a bigger share of government benefits. As the CBO put it, “government transfer payments are . . . moving away from households in the lower part of the income scale.”
Why? The CBO continued: “That shift reflects the growth in spending for programs focused on the elderly population (such as Social Security and Medicare), in which benefits are not limited to low-income households.”
And from the CBO report on income inequality:
Effects of Transfers on Different Income Groups. The shifts in the relative importance of different transfer programs since 1979 moved the distribution of transfer benefits away from households in the lower part of the income spectrum to some extent (see Figure 14 on page 24). Rapid growth in Medicare, which is not means tested (in other words, not provided to people based on a test of need determined by their income and assets), tended to shift more transfer income to middle- and upper-income households. At the same time, spending on Aid to Families with Dependent Children and its successor, Temporary Assistance for Needy Families, has declined relative to market income; benefits from those means-tested programs are heavily concentrated at the bottom of the income scale. As a result, households in the lowest-income quintile received 54 percent of federal transfer payments in 1979 and 36 percent in 2007.