The Baseline Scenario
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$1.30 > $1.00
Posted: 11 Feb 2011 11:41 AM PST
By James Kwak
Bruce Bartlett (hat tip Catherine Rampell) reproduces a table from a paper by Suzanne Mettler showing that most people don’t realize that they are beneficiaries of government social programs. For example, 60 percent of people who take the mortgage interest deduction say they “have not used a government social program.” Now, while the mortgage interest deduction is a subsidy designed to enable people buy houses, you could get into an argument about whether it’s really a “social program.” But these are the analogous figures for some more classic welfare programs:
Social Security retirement and survivors’ benefits: 44%
Unemployment insurance: 43%
Medicare: 40%
Social Security Disability Insurance: 29%
Medicaid: 28%
Food stamps: 25%
Obvious it’s easy for people to support lower taxes and lower government spending when they don’t realize they are beneficiaries of that spending. (And the numbers on a per-program basis would certainly be higher. For example, it’s likely that of people who take the mortgage interest deduction, many more than 60 percent don’t think that it’s a government social program; the number is only 60 percent because some of those people realize that other things they receive, like Medicare, are government social programs.)
But there’s another number in Bartlett’s post that I think is more interesting. That’s an estimate by the Tax Foundation that, in 2004, the average middle-quintile household received $16,781 in benefits from the federal government. That same study says that, on average, middle-quintile households get back $1.30 in transfer payments and other government spending for every $1 that they pay in taxes. I didn’t review the study in detail, but this is just common sense, anyway. When you have a progressive tax system and an income distribution with a much longer tail at the high end, you would expect people in the middle to be net beneficiaries of government.
I don’t really think that the point of democracy is for people to simply vote their self-interest. That could lead to all sorts of things, like the tyranny of the majority that Tocqueville warned about. But right now, it would be a distinct improvement if people would vote their self-interest.
