While we're on the subject of the poorly named "$3.5 trillion bill," I notice that the latest round of negotiations is centered on the shiny new idea of means testing the various programs that are funded by the bill.¹ Why didn't anyone think of that before?
Snark aside, I'm not opposed to means testing. If your goal is explicitly to help the poor while keeping costs under control, means testing is a good way of doing it. It has drawbacks, the biggest of which is added complexity, but in some cases that's worth it.
But it's a poor idea if you want programs that also benefit the middle class. In that case, the limit for means testing needs to be so high (probably around an income level of $150,000) that hardly anyone is left out. Is the added complexity of means testing really worth it just to reduce the number of recipients by 10% or so? Probably not.
So we need to be careful with this. If you truly want to limit a program to the poor, go ahead and means test. But if you want to benefit the middle class as well—something that Democrats should pay way more attention to—then means testing is just not worth it. Off the top of my head, I'd say that none of the programs in the spending bill should be means tested. If we really and truly need to reduce the cost of the bill, we should eliminate a couple of programs entirely and leave the rest alone.
¹Just in case you're not up with budget jargon, a program is "means tested" if it's available only to people with low incomes. Speaking very roughly, things like food stamps and Section 8 housing are available only to families who earn less than $30-40,000 or so, which accounts for about a third of the country. If there were no means testing these programs would cost about three times as much.
Means-testing also = more bureaucracy/red tape, etc. But, as usual, no expense or hurdle is too high or unnecessary if it means keeping the "undeserving" away from some public benefit.
Section 8 actually has a functional limit on the number of participants, so... it wouldn't cost more. It would just be more inequitable than it already is.
Must have some kind of non-reality based idea of what “middle class” means if getting to them requires $150k a year and that then reaches “almost everybody in the country”.
Kevin’s in California. I assume he’s talking family income, and two LAUSD teachers can make $150k a year easy. arguing they aren’t middle class is silly. So your choices are pick an income that is solidly middle class everywhere, pick one that excludes solidly middle class people in California, or put in geographic differences. Kevin’s going with door no. 1, and see no reason for the Dems to punish one of their most solid states.
Just claw back any payment when the higher income recipients file their taxes.
My favorite solution, too. Needs a real, effective Alternative Minimum Tax to make it work. None of this crap where paper losses reduce some fat cat’s tax to a pittance, or zero, never mind his gilded New York apartment and mansion in Florida. Not mentioning names, of course.
So every person in the nation should be receiving some sort of aid from the federal government? Who will be left to pay?
Receiving public benefits for one thing doesn't mean you can't afford taxes for others. In fact, as Kevin has been arguing, making more middle or even upper middle-class people eligible for more public benefits is a good way of ensuring that they have broad-based support.
Getting the benefit doesn’t mean you don’t pay for it. Think of the Coast Guard’s search and rescue teams. Everybody gets the same benefit (emergency services). Someone on welfare pays nothing for it, someone making $1 Mil is paying a decent chunk for it. These would be no different, both millionaires and someone on food stamps gets childcare for free, but only the taxes on millionaires would pay for it.
The difference is that one is insurance (i.e., prevention or at least mitigation of catastrophic but unlikely loss), the other is just a subsidy of ordinary activity.
So every person in the nation should be receiving some sort of aid from the federal government? Who will be left to pay?
All of us will pay. But some of us won't receive anything on net. Have you ever heard of Scandinavia?
The other problem with means testing is very often there’s a cliff once you hit the income limit. It makes no sense to work more, to earn more, if your loss of assistance from being disqualified is significantly more.
I agree on this. Few people can grasp what a bureaucratic nightmare means testing is, with huge costs for both the federal agencies and the people who have to negotiate the red tape to apply for the benefit. It's also impossible to avoid situations where a person or family who has an opportunity to increase their income actually ends up LOSING money because they get phased out of their benefit.
I know about this because of advocating for a carbon tax bill (H.R.2307) that recycles polluter fees back to households equally per capita as a "carbon cashback payment," with no means testing. It actually turns out to be very progressive in terms of the net benefit to low-income families. But in spite of that, we still hear "Oh, why should rich people get any carbon payment! Screw them!" This is in spite of the fact that the wealthy, who almost always consume far more fossil energy, will come out behind even with the cashback payment.
Incidentally, 2/3 of Americans (which I presume includes the middle class) will come out ahead with this program, and the absence of means testing will probably save the government a couple billion a year in overhead costs.
Trying to think of government programs for all that need no means testing. Can't think of many.
- Pay no income taxes on the first X dollars earned
- K-12 education for children
- Medicare
- Subsidies for child care
In other countries, you can add:
- College
- Universal health insurance
What about defense spending?