Taxpayer Subsidies

Most of Those Outraged by Obamacare Enjoy Big Taxpayer Subsidies Themselves

 

by Joshua Holland

Why do conservatives have such a visceral hatred of a market-based expansion of health care coverage once championed by the Heritage Foundation – a scheme that their last presidential candidate called an expression of “the ultimate conservatism”?

It’s not only because it was passed by a Democratic president they loathe. According to a recent study of Republican base voters conducted by Democracy Corps, Obamacare “goes to the heart of Republican base thinking about the essential political battle.”

They think they face a victorious Democratic Party that is intent on expanding government to increase dependency and therefore electoral support… [They believe that] insuring the uninsured dramatically grows those dependent on government.
Tea Party participants, in particular, were very focused on those who claim “rights” in the form of government services, without taking responsibility for themselves.

Race, according to the study’s authors, plays an unspoken role in determining who is and isn’t counted among the “deserving” poor.

It also dovetails perfectly with the overarching mythology that animates today’s conservative movement: the belief that there exists a large group of shiftless people whose lifestyles are subsidized by an increasingly overburdened class of hard-working Americans. It’s the ‘makers versus takers’ narrative that animates the movement – from the lowliest right-wing blogger to Mitt Romney’s claim that 47 percent of Americans don’t pay taxes and refuse to take care of themselves. It’s also complete nonsense. The reality is that virtually all Americans are, at various stages in their lives, both “makers” and “takers.”

Americans subsidize each other all the time, in dozens of ways, and the biggest beneficiaries are not the poor, but the middle class and the wealthy. But as Suzanne Mettler, a professor of government at Cornell University, found in her research, many of those receiving taxpayer subsidies don’t realize it. In fact, according to Mettler’s 2008 study, “94 percent of those who had denied using [government] programs had benefited from at least one; the average respondent had used four.”

In other words, many of those hardworking “taxpayers” outraged at the idea that they’re now being asked to subsidize health insurance for people with modest incomes themselves enjoy mortgages, health insurance, retirement accounts and other social goods that are being subsidized by other taxpayers, including those at the bottom of the income ladder.

Consider this: the subsidies that represent the heart of Obamacare (which don’t benefit the poor exclusively – a family of four making under $94,000 per year will be eligible for some help) will average $100 billion per year over the next decade, slightly less than the cost of the home mortgage deduction, which tallied $105 billion in 2011, according to Mettler. Seventy-seven percent of that subsidy flowed to households that made over $100,000 per year, according to the Center on Budget and Policy Priorities (CBPP). And Obamacare’s subsidies pale in comparison to the $177 billion we dished out to subsidize employer contributions to health insurance plans in 2011. Subsidized pensions cost us another $111 billion that year. To put all that in perspective, states and the federal government spent a combined total of $31.4 billion last year on the Temporary Assistance to Needy Families (TANF) program, which most people know as “welfare.”

Much of our hidden welfare state is obscured by design. Americans are, as Johns Hopkins political scientist Steven Teles puts it, “ideological conservatives and operational liberals.”

That is, they want to believe in the myth of small government while demanding that government address public needs and wants regarding everything from poverty and retirement security to environmental protection and social mobility…
The easiest way to satisfy both halves of the American political mind is to create programs that hide the hand of government, whether it is through tax preferences, regulation, or litigation, rather than operating through the more transparent means of direct taxing and spending.

Mettler writes that as a result of this dynamic many government programs are successfully “largely hidden from the public…”

Through them, government benefits people, providing them with opportunities and relieving their financial burdens, often without them even knowing it. Appearing to emanate from the private sector, such policies obscure the role of the government and exaggerate that of the market.

The other side of the mythology – that the “takers” don’t pay taxes – is equally as divorced from reality. It’s based on the fact that around 40 percent of the population pays no federal income taxes in a given year, largely as a result of Republican policies like the child tax credit. But the claim is the height of cherry-picking data because the federal income tax represents only around a quarter of the taxes paid in this country. When one includes all taxes, those in the bottom fifth of American households forked over around 16 percent of their incomes in taxes, and the next fifth paid 21 percent of theirs, according to CBPP. And many of those tax dollars ultimately subsidize the lifestyles of those who fancy themselves to be self-made “makers.”

It’s also the case that, contrary to the belief that people who don’t pay federal income taxes are a discrete group of Americans, most families don’t pay them for a year or two when their incomes fall below the threshold, but do pay those taxes in other years. Almost one in five people who don’t pay federal income taxes are students who will, one hopes, earn enough to pay federal income taxes when they graduate. Another fifth are seniors who paid those taxes before retirement.

It’s perverse to condemn all of these people as shiftless moochers, but that’s the foundational myth that supports most mainstream conservative thinking about government programs these days.

So here’s something to keep in mind when you hear someone grousing about being forced to help pay for health insurance for what they see as “the undeserving poor”: in all likelihood, that person has enjoyed subsidized college tuition or health insurance or home ownership or retirement plans– or any of a dozen other hidden government benefits in our submerged welfare state — and the idea of one group of Americans subsidizing another didn’t seem to be a cause of outrage then.