Why is President Biden's child tax credit universal, rather than going solely to those with low incomes? Jon Chait explains:
The answer is that giving money exclusively to poor families is a design choice that creates problems of its own. One is political: Programs with narrow, politically disempowered constituencies are easy to cut, and Republicans have long focused their welfare state rollbacks on programs targeted to the poor.
The usual way of putting this is "Programs for the poor are poor programs." And yet, as nearly as I can tell, the truth is just the opposite: Republicans might try to cut programs for the poor, but they rarely succeed except at the margins. In fact, it's all but impossible to cut programs for the poor. Here is per-capita means-tested spending over the past half century based on the bottom fifth of the population qualifying as "poor." You can stick in any other definition of "poor" that you want and the results look the same:
This data is taken from reports issued by the Congressional Research Service. The years 1962-2013 are here, and the years 2014-2018 are extrapolated from here. As you can see, means-tested spending never goes down. It only goes up.
Which is great! Here's the result:
What's more, programs for the poor aren't unpopular. In fact, very few people think we spend too much on the poor:¹
Even at the height of the welfare reform era, less than 20% of the public thought we spent too much on the poor. And before you ask, even Republicans agree. In the 2018 round of the GSS survey, only 13% said we spend too much on the poor. To sum up:
- Means tested programs for the poor have grown steadily over the past 60 years.
- They are (obviously) less expensive than universal programs.
- They are very, very difficult to cut. The only serious cut I can think of is the 1996 welfare reform bill, which (a) took years and years of work from conservatives, and (b) barely shows up as a blip in the long-term spending trend anyway.
- Means-tested programs have been very effective at reducing poverty.
- And they are pretty popular, even among Republicans.
All of this evidence is quite clear, and has been for a long time. So why do means-tested programs for the poor still have such a bad reputation among progressives?²
¹If you phrase it as "welfare," the results are much more negative. This says a lot about the way the word has been demonized over the years.
²Granted, there's also a second, technical problem with means-tested programs, which Chait mentions. If a program is means tested, it means that it goes away if you make too much money. This can provide a perverse incentive to keep your income low so you don't lose benefits. There are various ways to ameliorate this, but it's unquestionably an inherent problem with means-tested programs.
UPDATE: I replaced the original spending chart with one that shows spending per person.
Also soon to be the subject of my article in In These Times.
The first chart, a time series of money, is that inflation-adjusted?
While we're adjusting things, what about population? Real spending per capita certainly seems like a more valuable basis for comparison than nominal gross dollars.
As I’m looking at it, the subhead of the first chart says, “per poor person, adjusted for inflation”. It isn’t likely to look much different, but I would like to see a trend for ‘means-tested spending per poor person, real dollars, as a percentage of real median personal income’.
‘Real’ means ‘inflation-adjusted’.
I think people look at the enduring success of Social Security and Medicare and assume that means universal programs are more popular, not that these happen to be popular particular programs with a constituency (older people) who vote in high numbers. Schools and education budgets get cut plenty despite being universal programs.
They are means tested, to a point. But there is a difference between a cap in the benefit vs. a benefit being cut with income.
Schools and education, sticking with grade school, is universal only in the sense that it is supported locally. Federal and state aid varies a lot and much of it is "need based". There is also the competition aspect. If Federal aid helps those kids, then they might beat my kids to college.
Because my kid is 3 and while we are doing okay, having some extra money for him would be great!
I want help too!
Although he often complains about others not correcting for inflation, Kevin doesn't do this himself in his first chart. He also does not correct for population increase. It is hard to actually cut expenditures for a specific program, although whole programs can be cut and in fact the old "welfare as we knew it" was eliminated. But one way to cut programs by stealth is just to withhold increases for inflation or population. I'm sure that total real expenditure has increased since 1982 but what we need to see is real expenditure per capita, or maybe per "poor" person.
Also what is meant by "poor" must be carefully defined. The poverty wage level is tied to CPI, but not to GDP per capita. There has been a great deal of real GDP growth since 1962, that is the economy has grown faster than inflation, so that "poor" people as defined by income level have fallen behind upper income people - as have most wage earners:
http://www.skeptometrics.org/BLS_B8_Min_Pov.png
Kevin seems to think that if your income keeps up with inflation you are doing fine, but that is not what happened through US history - before around 1970 wages and lower incomes did keep up with GDP/capita. Kevin just does not seem to get inequality.
The SPM poverty level was at least originally based on the price of food. The nominal price of food increases, but less than that of other things which people would consider necessary for a good life. For example housing has been going up lately. As GDP increases, it should make it possible for people to have more things than just the bare necessities, but apparently the SPM "poor" don't get such improvements. This is true for all wage-earners, so ideally they could also be given boosts in income to reduce inequality. Reducing inequality does not just mean bringing the lowest up nearer to the median - the real inequality is between the highest income and the rest.
You obviously didn't click the link, the first link for the first chart specifically says the numbers were adjusted for inflation.
ACA doughnut hole?
The other problem with means-tested programs is that they cost more to administer, both for the program and for the beneficiaries. There are a lot of hoops to jump through, often humiliating ones, and people have to administer that.
True. It's cheaper just to make it up on the other and via higher taxes on the affluent.
Just give the benefit to everyone and take back in taxes at the end of the year. Simple.
Would have been nice if the stimulus checks were thusly:
$2000 - people below FPL
$1600 - people between FPL and 400% of FPL
$1000 - people between 400 and 550% of FPL
The Republicans use means tested programs to foment resentment. And they have been very successful doing that. That’s why progressives have a low opinion of them.
Also part of the problem: people tell pollsters they are against cuts in spending to the poor, because nobody wants to look like Scrooge. How many of them are mentally adding 'worthy' to 'poor', and thinking of a poor white woman with three kids whose husband was killed in an accident?
Why is President Biden's child tax credit universal, rather than going solely to those with low incomes?
I'm not a big fan of means-testing, and prefer to avoid it when possible, but, Biden's tax credit benefits households with incomes all the way up to $75,000, right? That's hardly rich, but in much of the country it's a good deal above "poor" too, right? (If you ARE going to means-test, this is the way to do it: set the bar high enough so that truly huge numbers of families benefit).
Also, anyone know if these limits (as well as the amount of the credit) automatically adjust upwards with inflation, as time goes by?
Michele Bachmann, speaking for the baboon colony, on their Republican Party's corporate managers,
https://www.rawstory.com/john-boehner-fox-news-2652384274/
Same reason people think money wins elections and voter ID suppresses votes. People are idiots.
It's a constant battle. Yes, it can be with Social Security and Medicare, but the political cost of trying to cut them in any way -- higher cost or cutting benefits -- is much higher. That's enough to counsel non-means-tested whenever feasible.
And that means you are constantly on the defensive. Better to reserve your battles for when you go on the offensive.
The biggest problem with means tested programs is getting to use them. Most of the programs have low usage rate and require signing up and proving you meet the requirements. Now, this is solvable - but that tends to be how they get limited.
Kevin, the bottom-fifth?
What about the bottom fourth? They're still in pain.
And housing programs haven't kept up with the needs.
So no, we're not spending enough.
Two points:
First, what is a means-tested program? Biden's proposal for a per-child tax credit is ostensibly means tested, since it phases out starting at $400K for married couples. But really, at that income level, it's a pretty universal program, and I bet its popularity is based on the large number of middle class families that expect to receive it.
Second, looking at your own chart, the fraction of the country that felt we were spending too much on programs for the poor nearly quadrupled from 1990 to 1996, when Clinton's welfare reform kicked in. At that point, the number starts dropping back down nearly to the 1990 value, in 2004.
To anyone old enough to read, it was very clear that welfare reform took the wind out of the Republicans' anti-welfare attacks. I've always thought that the reason that Rs hated Bill so much is that he was smart enough to take away their biggest stick to hit Ds with.
Program that only help the poor are actually pretty unpopular, and the Dems are pretty smart to make these new programs as universal as they can.
> They are (obviously) less expensive than universal programs.
Not so obvious: you have to pay for the means-testing to be administered. And, even if universal is more expensive, you get something for that cost. You only have to look at the California Employment Development Department to see means-testing in action. "Poor" people who need the money and who don't have good access to technology and/or English don't get the money quickly. (See NPR.) Get rid of the means-testing and you get rid of those disadvantages.
KISS.
Your graphic charts are 'all-US'. If you parceled these up....say showing poverty in Florida....compared to California....I think the year to year trend lines would look a lot better for Florida, than California. There are simply states where poverty improvement over the past forty years has not amounted to much....with other states showing some fairly big dynamics.