This is a good example of the perniciousness of tax expenditures. That is, the government nowadays spends lots of money just by lowering people’s tax bills; this is called a ‘tax expenditure’. The government tries to encourage homeownership, for instance, by lowering your monthly mortgage expense; it does this by allowing you to lower your tax bill every month by however much you pay for interest on your mortgage, to the tune of $106 billion per year. That’s an expense, just as it would be if the government had instead spent $100-plus-billion directly paying money for homes.

It’s even worse for health insurance: when your employer pays for your health insurance, it’s giving you income on which you don’t pay income taxes *or* Social Security. As Edward Kleinbard helpfully shared, the health-insurance tax expenditure costs Social Security $100 billion every year. That’s $100 billion that doesn’t show up in the usual accounting.

And yet:

> Catherine Frazier, a spokeswoman for the senator, confirmed the coverage, which Goldman said was worth at least $20,000 a year. The senator is on his wifes plan, which comes at no cost to the taxpayer and reflects a personal decision about what works best for their family, she said.

That $20,000-a-year plan is a benefit that the senator’s wife gets in lieu of salary, essentially. But it’s not taxed as salary. If she had been paid an extra $20,000, she would have had to pay taxes on it, and those taxes would likely have come to 30% or so of the $20,000, or around $6,000.

That a senator — or at least a member of a senator’s staff — is not aware that the government spends money when it fails to tax people for a benefit they receive is surprising. Though perhaps this gets down to a matter of ideology: the Republican Party has built a brand identity around opposing all taxes, so it probably doesn’t believe that foregone taxes are the same thing as money spent directly on services. This is unfortunate, because the effect is the same: people spend too much on health care.

And there’s an uglier side to paying for health care in this way: wealthier people get more help. That is, Senator Cruz’s wife is, in a very real sense, suckling at the public teat more than a poor person is. Suppose you’re in the lowest tax bracket, and that you’re lucky enough to have health insurance (unlike one in four people in your income bracket). Suppose, somehow, that you’re lucky enough to have a $20,000-a-year plan like Mrs. Cruz does. Well then U.S. taxpayers are subsidizing you to the tune of about $2,000. So Mrs. Cruz and her family draw about three times as much from the public trough as you do, even though she and Ted can likely afford it far more than you can.

Republicans have in the past objected to tax withholding, on the grounds that Americans don’t experience Federal sticker shock when they pay little by little throughout the year. If the goal is to make Americans know what they’re paying, and what they’re getting for it, then we should drop tax expenditures entirely and pay directly for what we get.

If we’re not going to do anything to alleviate the causes of poverty, the least we can do is help reduce the damage it causes. Among the least controversial (or so I thought) things we could do is provide food to poor people. About one in every ten households has received food stamps, and they average about $120 per month for food. That’s The total SNAP budget is about $81 billion. To put that in perspective, it looks like we’re budgeted to spend $85.6 billion on Operation Enduring Freedom in Afghanistan this year. Yet the recently-rejected House farm bill included a $2-billion-a-year *cut* to SNAP. So apparently we owe it to soldiers to stay the course, even when the course was disastrously conceived and executed, but we owe the poor nothing even when their poverty is our fault (e.g., your skin color consigned you to an officially inferior station with limited voting rights until at least the 1960s; your father ended up in jail as part of the country’s catastrophic war on drugs; the Federal Reserve cares a lot about inflation but not so much about unemployment).

I’m reasonably happy that House Democrats opposed these cuts to SNAP; I’d be happier if anyone’s imagination extended to *expanding* the program. But no; the Senate, which *has* passed a SNAP bill, cuts the program by $3.9 billion. The best we can come up with is to cut this program — just like the best we can come up with when it comes to Social Security is to cut benefits by using an alternate measure of inflation, even though Social Security pays retirees only about $15,000 a year, and even though Social Security is the *sole* source of income for one in five people over 65.

I don’t know what we’ve lost: the imagination that allows us to think our society can achieve great things, our feelings of brotherhood toward our fellow-men, or our ability to experience outrage. Whatever it is, it is sad as hell.

We continue to act like a poor country — like we’re going broke and can’t afford to guarantee a minimally good life for our brothers and sisters. I continue to lament this; the more I think about it, the more I know that I need to write a book about it. We’re not poor. We’re the most prosperous nation that the world has ever known. We’ve just chosen to redirect much of the massive increase in real incomes since the 1960s into the wrong things. What’s even more worrisome than that, however, is that we’ve made the mistake of believing that our “poverty” is baked in, rather than the result of an explicit choice. But it was and is a choice. It’s a choice that we make anew every single day, when we decide that we don’t have a society filled with people who owe something to each other, and instead decide that we’re each on our own fending for ourselves.

I see this in myself, and have to fight it constantly. “Save until it hurts,” I tell myself, “because when the time comes, no one is going to be there for you.” Or I consider how much I’ll have to save for my notional future children, in the expectation that well-funded public universities won’t be there to help them.

So that’s the plan on my end: write up where we came from and how we ended up at this particular sordid state, make it clear to our society that our “poverty” *is* a choice, and try to recreate the social imagination that we so desperately need.

I had a realization today: when we talk about ‘the poor’, we have a labeling problem. I think people are inclined, when they envision ‘the poor’, to envision a permanent underclass — the perennially helpless. The mental picture that a lot of people have is of people who were born to poor parents, will be poor and uneducated throughout their lives, and will raise children who are stuck in the same class as well for all their lives.

There may be some of that. Who knows, it may be the case that most of those who fall on hard times will spend their entire lives there. But the point is that, by envisioning the poor this way, we envision them as ‘the other’. And by envisioning them as the other, we don’t picture ourselves as people who could be poor by a stroke of fortune tomorrow. Consequently, we imagine a program like Medicaid as a program for ‘the poor’, rather than as a program that we ourselves could benefit from. We envision food stamps as something for other people. That makes it hard for us to defend food stamps as a thing *for all of us*. If the society is lucky, most of us will be altruistic enough to defend social programs for others, but I wouldn’t count on it.

Seems to me that if we really want to sell these things, we need to convince Americans that any of us could fall into the social safety net at any time. That turns Medicaid into a middle-class benefit, which the middle class should defend purely out of self-interest. (1 in 7 Americans is on food stamps. Medicaid and CHIP provide coverage to 1 in 5 Americans. There is no state, among those from which records are available, in which Medicaid pays for less than 1 in 4 births. Etc.)

As it happens, right now I’m reading a book (Frank J. Thompson’s [book: Medicaid Politics: Federalism, Policy Durability, and Health Reform]) that tries to understand whether Medicaid has the political clout to survive; and if it does, why it does. The maxim has always been that “a program for the poor becomes a poor program”; so why does Medicaid, the classic program for the poor, not become a poor program? Why does it seem to be thriving?

I recall some Jacob Hacker data showing that income variability is quite high: the probability that your income will drop by half next year is rather high; you might need that safety net after all.

Then of course there are the second-order effects of making middle-class life more predictable: if your future is more predictable, you can do more planning and long-range thinking. You can choose to stay in the community you want to live in, knowing that a layoff won’t force you to pack up and find work elsewhere. If you know your children will have health insurance regardless of whether you’re employed, you can go off and start a small business — you can take the sort of risks that society is supposed to encourage. Now that you and your neighbors are more stable, the guy running the bakery down the street knows that he can rely on a steadier stream of business; so he can plan further ahead in *his* future; and so forth. The benefits of a middle-class safety net radiate out far beyond the immediate beneficiary.

More on all of this soon. Hopefully more data, in particular.

(Sidebar bit of context: I voted for Mike to run against Scott Brown for the senate race when Ted Kennedy died. Had Mike won the Democratic primary rather than Martha Coakley, I’m convinced that the Commonwealth’s Senate delegation would still be 100% Democratic.)

Dear Congressman Capuano,

I see that Rep. Ryan is proposing to privatize Medicare. And I see that the GOP is trying to scare everyone into thinking that Social Security’s funding problems can only be addressed by cutting benefits for the middle class, even though the CBO says otherwise.

I have two questions about this. __First__, can you help me understand why the Democratic Party hasn’t taken hold of the narrative here? There’s a lot in the news about Social Security’s peril, but nothing about how the whole problem could be solved by eliminating the payroll-tax cap.

__Second__, and maybe more importantly: why can’t the Democrats take the fight to the Republicans? We shouldn’t be the party of fighting rearguard actions to prevent the dismantling of the social safety net; unfortunately, that’s most of what people have known us for over the last decade, at least, with the notable and terrific exception of the Affordable Care Act. (Here’s hoping it gets implemented.) Under President Bush, we were known as the party that fought successfully against privatizing Social Security. I’m glad we pulled that off, but why couldn’t we have taken the fight to them? Not only will Social Security not be dismantled, but it will be *strengthened*, so that it provides the sort of retirement that we need, and functions as a real pension for those of modest to average means? In the wake of Enron, everyone was aware — or could have been made aware through the use of that one vivid example — that 401(k)s are no substitute for a real defined-benefit retirement plan.

As for Medicare and Medicaid: we have all the facts on our side; why can’t we fight? Why can’t we bring Medicare to everyone, not just the aged (and some exceptions like those with end-stage renal disease)? Why can’t we show the American people that Medicare’s rate of cost growth is lower than that of private health care? Why must we settle for *not letting the Republicans destroy it?*

A robust Democratic party — the party I want to belong to — would fight these fights, not only because they’re just, but also because we have the facts on our side. And the story doesn’t seem hard to sell. During the fight over the Affordable Care Act, many were concerned that the elderly would fight the bill because they thought it would mean gutting their Medicare. So wouldn’t the simplest bill, with the most easily understood PR, have been one that simply extended Medicare to those under 65? This bill would have had the virtue of being *the best* bill, as well.

To some extent I know I’m preaching to the choir, both because you’re a very progressive representative and because the Senate is the problem more than the House; the Senate seems to be where progressive legislation goes to die. If the Senate is the problem, and the public decisively wants a stronger safety net (and I’d be *shocked* if, when asked whether Medicare ought to be extended to all Americans regardless of age or income, Americans said no), I want the Democrats out there every day saying that the Senate is standing in the way of the people’s will. I want “procedural reform” on everyone’s lips.

In short, I want some fight in my party. And unless this is a case of media misrepresentation, I just don’t see that fight.

Having now laid out a largely negative case, I need to explain that beneath it all is a very positive question: what do I, as a resident of the nation’s most reliably blue state, do to fight for a Democratic party that’s worth fighting for?

With respect,
Steve Laniel

…namely the “it’s all a bunch of ironic hipsters whose lives are so comfortable that they don’t feel any real commitment to anything” brush, I ask: isn’t it just possible that much of Stewart’s audience voted for Barack Obama expressly because they feel sadness for those who can’t afford health insurance, and want to help those less fortunate than themselves? For instance, maybe, just maybe, the young liberals in the audience wanted universal health care for entirely non-ironic reasons?

I resist the temptation to close with an unironic fuck-you.