Friday, 28 November 2014 / TRUTH-OUT.ORG

What Government Aid?

Thursday, 08 December 2011 03:27 By James Kwak, The Baseline Scenario | Op-Ed

Earlier this year I wrote about a paper by Suzanne Mettler that included a survey showing that a large proportion of beneficiaries of government programs insist that they have never been beneficiaries of any “government social programs”—60 percent for the mortgage interest deduction and 44 percent for Social Security retirement benefits, for example. This provides ample evidence that “keep your government hands off my Medicare” is not a fringe opinion.

Recently, I read Mettler’s book, and there’s more to the story. One of her arguments is that hiding government programs in the tax code undermines the democratic system because it obscures the role that government plays in society. There were two quantitative examples I thought were particularly revealing.

Mettler distinguishes between visible federal programs, such as Pell Grants and Social Security, which are administered by government agencies and therefore are more recognizable as government programs, and submerged programs such as the mortgage interest deduction or 529 accounts. She found that the more visible programs a person uses, “the more likely he or she was to agree that government had helped in times of need.” Benefiting from submerged programs, however, had no impact on people’s perception that the government had helped them—even in the case of things like HOPE or Lifetime Learning tax credits, which help people pay for eduction. In fact, “the greater the number of tax breaks an individual had benefited from, the more likely he or she was to disagree that government had provided opportunities for an improved standard of living” (pp. 41–43, emphasis added). (This is after controlling for socio-economic characteristics.)

In short, the way our government currently distributes goodies makes it possible for people to think that they are paragons of individual self-reliance while still being enormous beneficiaries of other people’s tax dollars. That explains a lot about politics today.

Mettler and Matt Guardino also did an experiment that is described in chapter 4 of the book. For various tax expenditures, they asked people whether they supported them or not before and after giving them some information about the policies. For the mortgage interest deduction, one group was told only what it is; the other group was told what it is and that: “The people who benefit most from this policy are those who have the highest incomes. In 2005, a large majority of the benefits went to people who lived in households that made $100,000 or more that year.” (That’s absolutely true: you can look at last page of the JCT report on tax expenditures.) The first group favored the deduction by 81 percent to 5 percent; the second group was evenly split, 40 percent for and 41 percent against. (Support for the Earned Income Tax Credit, however, rose when people had more information.)

So there may be some reason for hope. Give people a little more information, and they are more likely to recognize their own self-interest. That would be a big improvement over the present state of affairs.


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What Government Aid?

Thursday, 08 December 2011 03:27 By James Kwak, The Baseline Scenario | Op-Ed

Earlier this year I wrote about a paper by Suzanne Mettler that included a survey showing that a large proportion of beneficiaries of government programs insist that they have never been beneficiaries of any “government social programs”—60 percent for the mortgage interest deduction and 44 percent for Social Security retirement benefits, for example. This provides ample evidence that “keep your government hands off my Medicare” is not a fringe opinion.

Recently, I read Mettler’s book, and there’s more to the story. One of her arguments is that hiding government programs in the tax code undermines the democratic system because it obscures the role that government plays in society. There were two quantitative examples I thought were particularly revealing.

Mettler distinguishes between visible federal programs, such as Pell Grants and Social Security, which are administered by government agencies and therefore are more recognizable as government programs, and submerged programs such as the mortgage interest deduction or 529 accounts. She found that the more visible programs a person uses, “the more likely he or she was to agree that government had helped in times of need.” Benefiting from submerged programs, however, had no impact on people’s perception that the government had helped them—even in the case of things like HOPE or Lifetime Learning tax credits, which help people pay for eduction. In fact, “the greater the number of tax breaks an individual had benefited from, the more likely he or she was to disagree that government had provided opportunities for an improved standard of living” (pp. 41–43, emphasis added). (This is after controlling for socio-economic characteristics.)

In short, the way our government currently distributes goodies makes it possible for people to think that they are paragons of individual self-reliance while still being enormous beneficiaries of other people’s tax dollars. That explains a lot about politics today.

Mettler and Matt Guardino also did an experiment that is described in chapter 4 of the book. For various tax expenditures, they asked people whether they supported them or not before and after giving them some information about the policies. For the mortgage interest deduction, one group was told only what it is; the other group was told what it is and that: “The people who benefit most from this policy are those who have the highest incomes. In 2005, a large majority of the benefits went to people who lived in households that made $100,000 or more that year.” (That’s absolutely true: you can look at last page of the JCT report on tax expenditures.) The first group favored the deduction by 81 percent to 5 percent; the second group was evenly split, 40 percent for and 41 percent against. (Support for the Earned Income Tax Credit, however, rose when people had more information.)

So there may be some reason for hope. Give people a little more information, and they are more likely to recognize their own self-interest. That would be a big improvement over the present state of affairs.


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