Yes, But What Does It Mean?

According to a recent report issued by the Mercatus Center, a libertarian-leaning think tank out of George Mason University, one-third of all Americans received some form of means-based public assistance, like Medicaid or food stamps, in 2010. The report then goes on to say that when Social Security, Medicare and unemployment benefits are included, nearly half the country—148 million Americans—were living in a household receiving some form of government benefits.

This comes at a time when less than half of all Americans are paying income tax.

It makes your blood boil, doesn’t it? Just think about it: half the country footing the bill for the benefits of the other half; the industrious ones being crippled by onerous tax burdens to prop up those who are too lazy or stupid to take care of themselves.

The problem with this report is that Social Security, Medicare, and even unemployment benefits are not “gifts” from the federal government. People pay into these programs throughout the course of their working careers, and, therefore, they can hardly be considered government entitlements. So the 50% number is pure propaganda designed to enrage those who look for any excuse at all to bash any and all government programs—even successful ones like Social Security and Medicare .

This is not to say that we don’t have a problem in this country, however. When one-third of the country is so poor that they require public assistance and when one-half of all taxpayers make so little that the government can’t even tax them, that should concern all of us, because it means that our country is on an unsustainable economic path. The question is how do we interpret this data.

Economic conservatives like those at the Mercatus Center and the Heritage Foundation would argue that the size of the American government itself is the issue. They would probably maintain that government programs designed to assist the poor actually create a perverse incentive not to work, while at the same time penalizing those who are the most industrious in the country. The solution, then, would be to dramatically reduce the size of government, thus lowering taxes, giving wealth creators (i.e., the rich) more money to invest, and creating jobs for those Americans who actually want to work. To do this, they advocate privatizing some current government programs (Social Security, for example) and entirely eliminating other programs (Medicaid) and troublesome government agencies (The Environmental Protection Agency, among others).

Progressives, on the other hand, would interpret this data as evidence that the middle class is being squeezed economically to the point of oblivion and that our public policies, which are skewed in favor of the top 1%, are creating a nation of rich and poor. If 50% of Americans pay no taxes, they would argue, it’s because they aren’t making anywhere near enough to be taxed in the first place. Cutting government programs like unemployment benefits, Social Security or Medicare is exactly the wrong thing to do, especially at this time, they would argue, because all this will do is push more Americans into the ranks of the poor. Taking their refrain from Franklin Roosevelt, progressives would argue that, especially during difficult economic times (i.e., right now), what we need is an even stronger safety net reestablished for the most vulnerable Americans and large-scale public spending to stimulate the economy.    

So what’s the right way to interpret the data put out by the Mercatus Center? This issue, I believe, gets to the heart of politics in the United States. It pits those who believe that “government is the problem” (conservatives/libertarians) against those who believe that government has an important role to play in insuring that all citizens have a decent minimum standard of living and have access to those goods that are vital for human flourishing—employment at a living wage, adequate health care, and some degree of economic security in their old age (progressives/liberals).

So which side of this issue do you come down on and why?