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Caveat Lector - Politics, Government and the Free Press – by Mark B. Evans

Too many Americans ignorant about their use of government programs

by on Aug. 05, 2011, under Editorials, Politics

How do you argue about the size of government with someone who hates the government but cashes a government check?

 

As government-hating members of government last week debated the best way to drive the economy off a cliff in the name of austerity and personal freedom, the liberal blogosphere became abuzz about a 2010 study that seemed to explain from where the government haters drew their political support – ignorant Americans.

Ignorant is not used lightly here nor is it meant to be pejorative. It simply is the best word to describe the stunning fact that nearly half of Americans receiving government benefits don’t recognize the benefit as coming from the government.

The study’s author, Suzanne Mettler, a Cornell professor of American Institutions, attempted to explain the difficulties the Obama Administration faced in trying to reframe the debate about the effect of government social spending on the economy and on the quality of life of all Americans. [Read the study: The Submerged State]

Mettler argues that most of the effects of social spending are hidden, which she calls the “submerged state.”

To illustrate the difficulty President Obama would have – and is having – in surfacing the submerged state so that we can have a rational discussion about it, she included the results of a 2008 government study asking recipients of government social spending if they had ever used a government social program.

The results are an indictment of American civic literacy.

To wit, 44 percent of Social Security recipients, 41 percent of military veterans, 43 percent of unemployment recipients, 40 percent of Medicare recipients, 43 percent of college Pell Grant recipients and 27 percent of welfare recipients all said they had never used a government social program.

But those programs are not the submerged state, as Mettler describes, instead they were included to illustrate that even obvious government programs are not so obvious to their millions of beneficiaries.

Her main point had to do with other, hidden forms of government spending, such as the home mortgage interest tax deduction. Six out of every 10 respondents to the survey didn’t recognize the deduction as government social spending.

But it is. The home-owning industry is the engine that drives our economy and the government spends hundreds of billions of dollars a year subsidizing it through tax deductions and government-backed loans. If not for government intervention in the housing market homes would be vastly more expensive, loans harder to get and the sizes of homes much smaller.

Mettler’s study helps show how entwined the federal government has become in American society. The government is everywhere. It cannot be drowned in a bathtub, as anti-tax warrior Grover Norquist wants, without drowning the rest of us in the process.

We have spent ourselves into a fiscal cavern. Our debt is enormous and must be reduced yet our economy teeters on a precipice so dearly that any drastic reduction in government spending or drastic increase in taxation could tip it into the abyss.

The solution requires reasoned, rational debate to craft a long-term plan to extricate us from the hole we’ve dug.

But as we saw last week, it’s hard to reason with ignorance.

This entry was posted on Friday, August 5th, 2011 at 11:03 am and is filed under Editorials, Politics. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

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  • renner

    Her main point had to do with other, hidden forms of government spending, such as the home mortgage interest tax deduction. Six out of 10 respondents to the survey didn’t recognize the deduction as government social spending.

    Massively dumb. What’s next, the standard deduction? The personal exemption? Wow, so now everyone who ever files an income tax return is a welfare recipient. No wonder our fiscal condition is so screwed, with this sort of thinking going on out there.

    • sean

      How is it massively dumb?  The government is giving you money you otherwise wouldn’t be eligible for because you have a mortgage.  Renters (including myself) get no such tax deduction.  It is therefore government assistance that you are receiving, plain and simple.  I don’t see how that point is even debatable. 

      Uncle Sam subsidizes agriculture, poverty, corporations, rich people, poor people, and it also subsidizes homebuying.  Facts are facts.

      • O-dog

        The dumb part is calling it government “spending”, and calling people ignorant for not realizing they are getting a “handout” from a government program. How is the government “giving me money”? You do realize a tax deduction is not the same thing as a tax credit, right? And not even all tax credits are refundable?

        If the school bully charges me ten bucks a week not to beat me up at lunchtime, and one week he decides he wants to date my sister, and in exchange for my saying something nice about him he only charges me four bucks, is he really spending six dollars? According to your logic he is. And in his own mind he probably agrees with you. “Hey, I could have bought myself that awesome Che-themed Trapper Keeper with those six bucks! He should thank me for giving him that money of mine!”

        I would tend not to see it that way.

        If you rent, and don’t have enough deductible expenses, you get to take the standard deduction. Do you call that a government handout too? If you have another child and get to claim an additional personal exemption, is Uncle Sam subsidizing your kid? When asked, are you going to tell Professor Mettler, “Why of course I’m a recipient of government spending. They’re giving me some of my own money back to help me raise my children.”

        Last year my itemized deductions, even with a mortgage interest deduction, was less than the standard deduction. So I could claim the “government assistance” you speak of by taking the mortgage deduction, and end up paying the government MORE in taxes; or I could forego that “assistance”, claim the standard deduction, and pay the government LESS in taxes. So no handout, but they send me a larger refund check?

        And you don’t see how the point is debatable?

        Are you seriously going to equate someone who gets a check mailed to them by the government with somebody who gets no check, but who merely gets to keep more of the money that they started out with? And then decry their ignorance because they don’t see it the same way?

        Someone who doesn’t realize their Pell Grant is a government handout is truly ignorant. But if you’re also going to call someone ignorant because they don’t acknowledge that their mortage interest deduction is a “government handout”, then you’d better be prepared to admit that, by your logic, EVERYONE who files a tax return is taking a handout…even renters like yourself.

        • GermanCaveGuy

          The government isn’t giving you money when you take the home mortgage tax deduction.  Instead, they are allowing you to keep more of the money you earned by allowing you to deduct a portion of the interest you paid from the taxes you owe.

          However, it is still government spending.  They aren’t just simply reducing your tax obligation to allow you to keep more money.  They are instead requiring you to spend your money in a certain way (paying a mortgage) to receive the deduction.   Essentially, because the biggest requirement is to pay interest on a mortgage, the government is paying you money to pay a bank more money.  

          Bottom line, the government is spending money it could otherwise collect in order to create an incentive to carry a mortgage.  It is no different than the Pell grant being given to create incentive for people to go to college.  

          Granted, in each case, the money could be turned down.  However, by claiming the credit or accepting the grant, a person is indeed a recipient of a form of government spending.

          • O-dog

            There is a semantic issue and a consistency issue here. The semantic issue – calling it “spending” when the government is NOT spending any money – is a losing fight. I understand why people insist on calling it “spending”, if they feel it represents money the government might otherwise collect. But that doesn’t make it “spending”. Spending requires payment.

            That’s like buying a new car and being told the dealership is “paying” you if you negotiate their price down by $500. Don’t forget to say thank you! If I use some of the savings to put a CD player in my car, I don’t consider it to be paid for by the car dealership…even if the next customer fails to negotiate the same deal.

            It’s the same logic that people use to call an increase in spending a “spending cut”. All you have to do is propose a greater increase, say $3 million, and then reduce it to $2 million. Ta da, I’ve “cut spending” by $1 million, even though I’m now spending $2 million more than I was. After all, that $1 million represents money I could have used for something else.

            You can’t spend what you don’t have. Even when going into debt, the actual “spending” occurs when you actually pay out the money that someone else has loaned to you.

            It is fundamentally different from getting a Pell Grant. That’s more like the car buyer who wins a free CD player from a contest the dealership is having. I don’t care if the accountant in the back office sees the cost of that CD player and a lower purchase price as the same kind of numbers going out the window, it’s not the same kind of transaction.

            But taken by itself, I don’t really care what you want to call it. I’m not blind to the fact that it can, in fact, represent more money in my pocket. But if you’re going to use that as the basis for an argument that many people are ignorant to the government handouts they receive, I call BS. You are being inconsistent if you do not also call the personal exemption and the standard deduction “government spending”. They both represent additional money the government declines to receive in payment. I can also turn these forms of “government spending” down, though I doubt anyone ever thinks of doing so.

            • jerome

              Kind of like calling the repealing of a tax cut a tax increase?

        • Visian

          Excellent post. Spot-on. Keeping money you made does not equate to a government benefit. Some people won’t be happy until the government takes all our money and then “allows” us to spend it “fairly.”

        • Tartessos

          Neither of you are quite getting it. The mortgage interest subsidy is certainly social spending. It is not a “government handout” to the recipient, though: it is a handout to the banks. It encourages more borrowing from banks by making it cheaper. It is a subsidy that is designed on its face to look like something beneficial to the recipient, while systemically it drives up real estate prices by subsidizing borrowing.

  • ralfie

    I’m afraid you don’t listen to the debate. Those opposed to government waste, are still required by law to contribute to SSI and enroll for Medicare. Do they have any choice?
     
    If I applied your thinking, to the war, I would conclude you killed Afghan and Iraqi citizens. Really doesn’t make much sense does it?

    • leftfield

      “Those opposed to government waste, are still required by law to contribute to SSI and enroll for Medicare.”

      Those opposed to participating indirectly in America’s wars are still also required by law to do so.  Those opposed to watching the radical right wing destroy the last remnants of a nominal democracy are even required to listen to stooges because they were elected by other stooges.   

      • Zonie guy

        Whatever, Left-aloney……How long did the Dems have the House, Senate, and White House not so long ago…..? And just what did they accomplish? Just spent WAY more $….Don’t lecture any Tea-party folks about ruining this country…..

        • http://pointmantucson.yuku.com/ Michael Patrick Brewer

          Two ships passing in the night…if you guys were in a debate class you would both have to sit down.

  • leftfield

    Ignorance is the only thing that is not scarce now.  Since there is little reason to hope that it will become a rare commodity, I can only hope that all these people will “miss their water when their well runs dry”. 

  • Ben

    I guess denial is not just a river in Egypt for many teahadists.

  • nissykayo

    Great article and study! I posted this to reddit and it is currently on the front page of /r/politics.   You may not know, but that’s kind of a big deal.

  • http://www.thepresidentialcandidates.us ThePrezCan

    Great points. How can you have a rational debate with people who seem to be completely oblivious to reality?

  • Martin Finnucane

    I was following you, until this part:
    We have spent ourselves into a fiscal cavern. Our debt is enormous and must be reduced yet our economy teeters on a precipice so dearly that any drastic reduction in government spending or drastic increase in taxation could tip it into the abyss.
    Enormous by what standard?  Why must our debt be reduced?  What happens if we keep on accumulating this cavernous debt?  Still waiting for the bond vigilantes to swoop in and murder us in our sleep …  It hasn’t happened yet, not even in Japan (debt=%200 of GDP).
    As for the “tipping us into the abyss,” I gotcha there.   These “gubmit bad” idiots are anti-American, anti-democratic, and indeed, anti-civilization.  They are the primitives that find a metal axe in the woods and praise the gods for the gift, forgetting that they dropped the same axe in the same place the previous year.  The civilization that we enjoy (you know, like potable water, flush toilets, air quality standards, etc.) were not fruits of some natural or god-given bounty, or the neo-liberal version, “free market”-given.  They were wrought by human hands, by our hands, together.

  • http://pointmantucson.yuku.com/ Michael Patrick Brewer

    Here is the other “submerged” world. According to the Wall Street Journal 80 major Fortune 500 Companies get at least 20% of their income from the government.
    Lockeed Martin gets 60% of its revenue from sales to the Defense Department and 85% of its revenue from the U.S Government.
    Humana gets 79%  of its revenue from health contracts with the Defense Department.
    Motorola reports 65% of its sales to police, fire, public safety and U.S government contracts.
    Martin Marietta Materials receives 28% of its income from the sale of infrastructure materials for government funded projects.
    Dell Computer realizes 27% of its profits from government projects.
    And of course the list goes on.  Dwight D. Eisenhower is as much a prophet as Jeremiah with his predictions and caveats about the Military Industrial Complex.
    In truth Military  and Defense spending is life support for our economy and has been since just after WWll. It is also the home of tons of research…submerged that is!
    Sans the banking crisis which in retrospect was a financial S & M, no one much complained about these contracts because they create jobs. Lots of jobs. Without Motorola in Phoenix and Raytheon in Tucson parts of those cities would be ghost towns.  This revenue debacle is so beyond party politics that it makes the sandbox debates look like a massive red herring.
    I wonder if the Tea Party folks would like to go on a field trip to the headquarters of the aforementioned corporations, and few pharmaceutical companies. and ask them if they would like to give their jobs back so as to balance the budget?
    We could travel down the Interstate highways that are being improved and widened, stop by the roadside and ask all those construction workers if they would like to give their jobs back so that we can “Take Back America!”

  • Ben

    So, what you are saying is that the federal government has become so large it has invaded every part of every persons life and is impossible to avoid?  Somehow, this is an argument to make it bigger?

  • http://pointmantucson.yuku.com/ Michael Patrick Brewer

    No argument to make it bigger, just laying out realities that do not fit the tidy world of slogans. Somehow this dichotomy that we have created between the “Government and the People” is preventing any problem solving. This big boogie man Government is US. All the paychecks they dole out go straight back into the economy, and our taxed and create taxes. The current Investor class is not creating jobs…but they are sitting on tons of cash, especially the Banks. (My son works for Citi Group)  So without throwing the baby out with the bath water, how would you create jobs? Now?
    Does anyone really think that Caterpillar and John Deere our bringing jobs back to the U.S.?You think that Bombadier is just going to close shop in Mexico and bring jobs back home?  Is China going to vacate their position in exports of just about everything from our underwear to computers? Is Israel going to give up making 80% of the bullets for our Army.  Who lost all these jobs? Why? Yeah, tax code, but who has the balls to change it? This stuff is sooo far beyond the role of a President that it worries me.  No one in the GOP debates tonight has the moxy to reverse all this except maybe Gingrich and he is not electable. So tell us what you would do. Lay out a plan and let the readers here chime in.  The endless debate about big and small is becoming child’s play. Where’s the beef?

  • http://www.ronpaul.com Catherine Rightsell

    Elect Ron Paul President 2012.

    • Allan Krueger

      I vote for you, Catherine!

  • Allen

    “Her main point had to do with other, hidden forms of government spending, such as the home mortgage interest tax deduction. Six out of 10 respondents to the survey didn’t recognize the deduction as government social spending.”

    So, by this manner of thinking, anything the government doesn’t take from us, is welfare. Following this line, they could simply raise taxes to 90% for all Americans, and give out thousands of “deductions” for everything from housing to entertainment allotments, and proceed to call it “government spending”. If the blame is to be laid at the feet of the people of this nation, then it is not the American people’s ignorance of “government spending” that is the problem, it is the gullability among us that our government has taken advantage of for far too long which has brought us to this point. The REAL problem is that there are those who have the sheer audacity to present this skewed spin on “government spending”, proclaiming anything that government does not take from us is to be considered a gift to us, which is in fact the real problem, and the American people are waking up to just how little those working in our government give a damn about rights, freedoms, and the American way, when set against their own ability to manipulate the facts in a manner that gives them direct control over us and our money!

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