The Economist
America's safety net
Taking welfare and hating it
AN ARTICLE in Sunday's New York Times by Binyamin Appelbaum and Robert Gebeloff on the expanding scope of the American "safety net" has generated some interesting comment. Government transfers flowing to middle-income households have increased relative to those going to lower-income households, as Messrs Appelbaum and Gebeloff maintain. However, as Mike Konczal and James Kwak have pointed out, much of the change may be due less to the creeping reach and open-handedness of the welfare state and more due to (a) the mid-1990s reduction in welfare benefits, (b) the fact that the huge baby-boom cohort has aged into Social Security and Medicare eligibility, (c) the rising cost of health care, and (d) the current recession, which accounts for recent, large and putatively temporary increases in the scope and generosity of earned-income-tax-credit and unemployment benefits.
These points are well-taken, though it is important to note, as Casey Mulligan does, that it's a mistake to think that relaxing eligibility requirements and increasing benefits during a recession is just the safety net "automatically" doing its job. This is an elective expansion of the safety net. Moreover, Mr Mulligan notes that eligibility requirements for some programmes have been relaxed generally, and it's seldom politically attractive to ratchet programmes back once they've been ratcheted up. So it appears Mr Kwak is incorrect when he maintains, "The idea that politicians have expanded the safety net is just not true, with the exception of the Medicare prescription drug benefit and an expansion in Medicaid that hasn’t taken effect yet."
More interesting than these wonkish details are Messrs Appelbaum and Gebeloff's miniature portraits of the uneasiness expressed by middle-class Americans who depend on government transfers. Mostly, they depict ordinary folks who would rather go without government assistance, but are anxiously baffled about how they would manage without it. Take the case of Gordy Peterson:
Gordy Peterson, 62, who has used a wheelchair for 30 years since a construction accident, has reluctantly reached a similar conclusion.
“I’m a conservative,” he said by way of introducing himself. He built his own house before his injury and paid for it in cash. He still thinks the government should operate that way. He never intended to depend on federal aid and said he sometimes felt guilty about it.
But for the last three decades, he has received a regular check from the Social Security disability insurance program, and Medicare has helped to pay his medical bills.
[...]
Mr. Peterson, an easygoing man who looks down when he thinks and smiles sheepishly when he offers an opinion, looked down after completing the story of his own dependence on the safety net.
“It’s hard to beat up on the government when they’ve been so good to you,” he finally said. “I’ve never really thought about it, I guess.”
Or take the case of Ki Gulbranson, whose family has benefitted from relaxed earned-income-tax-credit eligibility rules:
Instead [of paying more in taxes, Mr Gulbranson] said he would rather give up the earned-income credit the family now receives and start paying for school lunches for his children.
“I don’t demand that the government does this for me,” he said. “I don’t feel like I need the government.”
How about Social Security? And Medicare? Can he imagine retiring without government help?
“I don’t think so,” he said. “No. I don’t know. Not the way we expect to live as Americans.”
I think some readers detect a lightly mocking tone in this article, a subtle condescension toward the likes of Messrs Peterson and Gulbranson, who would like to do without government help, but can't quite see how that would work. I do think there's a whiff of this, though I doubt it's intentional. Mostly I find a faithful depiction of a common and interesting conflict within many Americans between their de facto dependence on government transfers and their closely-held ideals of independence and self-reliance.
To understand all this, I think it's important to acknowledge that our so-called "social insurance" programmes, such as Social Security and Medicare, produce a sense of dependency by design. Dependency is precisely what makes them politically self-reinforcing and thus dependable—credible as a sort of insurance. But, like it or not, many Americans do find this dependency humiliating. When it is understood that these programmes, as presently constituted, are fiscally unsustainable, the humiliation of dependency is often joined by the fear that one may not be able to really depend on them after all, or by guilt that one is in effect free-riding off future generations, who will have to pay more and get less in return. And then, on top of it all, there is frustration over the fact that one hasn't a clue what to do about any of it.
Defenders of the massive New Deal-Great Society entitlements are inclined to see hypocrisy or thick-headedness in those who oppose in principle programmes on which they in fact depend. A more generous way to understand this phenomenon is to acknowledge that the New Deal-Great Society social insurance institutions have proved successful in engendering economic dependence and, thereby, self-reinforcing political support, but they have failed to engender a corresponding shift in America's culture of self-reliance. This has left many Americans feeling divided against themselves. Instead of giving in to the ideal of in-it-together mutual dependence, millions have instead become almost manically vehement in their profession of the ideals of independence and self-responsibility.
One argument for transforming Social Security and Medicare into Singapore-style forced savings programmes is that a system which relies primarily on intra-personal transfers better suits America's ingrained ethos of individual responsibility and would thus help resolve the cognitive and emotional dissonance created by the status-quo system. We will never be Danes and we might as well accept it. I would add the conjecture that helping Americans find a sort-of inner political peace by redesigning the safety net to go with rather than against our culture's grain would reduce the felt need to lash out against the "socialism" of the residual interpersonal redistribution required to make the safety net really robust for all.
http://www.economist.com/blogs/democracyinamerica/2012/02/americas-safety-net
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