Makers, Takers, and YOYOs

September 20th, 2012 at 10:35 am

Well, it took a while, and an awfully circuitous route, but we’re finally getting back to the national debate we need to have, the one about the role of government.

Unfortunately, it’s taken a terribly misguided, albeit revealing turn towards “makers versus takers.”

What’s misguided about it?  It misses the dynamics of real lives in America and instead, creates a false and divisive framework.  Were we to accept this framework and try to embed it in our economic policy, our nation would be the worse for it.

The implication is that one group—the makers—is supporting the well-being of another—the takers.  Moreover, since the takers don’t pay taxes—they just take government benefits—they are endlessly incentivized to support politicians who keep their Ponzi scheme going.  When conservatives say “we’re reaching a tipping point” they mean that the takers will soon be a larger electoral block than the makers, at which point the former only have to get up from their well-worn sofas once a year to vote for their facilitator-in-chief who pledges to keep the transfer checks coming.

But, in reality, for the vast majority, both here and in every other democratic economy, it doesn’t work that way.  The distinction is meaningless.  We almost all “take” at some point and “make” at others.  Medicare and Social Security programs are social insurance programs to which we contribute during our working lives and receive benefits from in retirement.   Are the beneficiaries of these programs makers or takers?  About 60% of those who don’t pay federal income tax pay payroll taxes, meaning they’re working.  Slightly over a fifth are low-income elderly families.   Are they takers who should leave retirement and get the hell back to work?

Mark Schmitt makes the point using unemployment insurance (UI):

Everyone who receives benefits from UI, without exception, has worked – usually full-time and steadily for at least a year – and paid into the system through their employers. And they will (they desperately hope) work again and pay even more. Some people might end up receiving more, over their long working lives, while others might pay in while having the good fortune never to be unemployed. But that’s the nature of insurance. Most of us, other than the permanently disabled, are givers and takers to government, because that’s what it is to be part of a community or a nation.

Are low-income workers benefitting from the wage subsidy that Ronald Reagan called the best anti-poverty program—the Earned Income Tax Credit—takers?  What about kids who lost a parent and benefit from Social Security survivors benefits, as did Paul Ryan (and yours truly)?  What about those who take advantage of government-backed student loans (again, yours truly)?  The mortgage interest deduction, the favorable tax rate on capital gains, the deductibility of interest costs from debt financed private equity deals?

Is there someone somewhere who’s not disabled, is of working age, lives off of government assistance but neither works nor pays any taxes?  In a nation of over 300 million there must be, but they’d actually be hard to find—according to my CBPP colleague Arloc Sherman, 94% of entitlement and UI benefits go to people who are elderly, disabled, on UI, or work at least 1,000 hours per year.   And if they ever put gas in their car, they paid a federal excise tax, not to mention state sales tax, local property taxes, and so on.

A few weeks ago, Bill Clinton warned of a “you’re-on-your-own” approach to government versus a “we’re-in-this-together” mode.  The makers/takers distinction feeds directly in that YOYO mindset, and you can see it embodied in the privatization or voucher schemes for social insurance, the Paul Ryan/House budget which cuts from the poor to give to the rich, the attack on the safety net, the proposed cuts to mobility enhancers like college aid, the repeal of health reform designed to reduce the number of uninsured, all fed by false claims as to the shares of Americans who don’t pay taxes or who needlessly depend on government largesse.

All of us need some help at some point.  Sometimes that help comes from family, sometimes from government, typically from some combination of both, but no one goes it alone.  If you’re lucky, have people who care for you, or have the wherewithal to seek it out yourself, there will be a ladder in front of you at some point.   That doesn’t make you a taker—you’ll have to climb it yourself.

Right now, I’m hearing a lot from people who were born on third yet think they hit a triple.  They’re telling me that the role of government is to kick out those ladders.  But they are wrong.  The role of government is to make sure those ladders are there, along with insurance against ill-health and penury in old age, a safety net when the economic bottom falls out, investments in the public goods the market won’t provide, protections against negative externalities like pollution and market bubbles that private markets fail to price in, and so on.

And the more we think in terms of YOYOs and makers and takers, the less likely we are to recognize how important this role is and how dangerously close we are coming to rejecting it.

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10 comments in reply to "Makers, Takers, and YOYOs"

  1. mitakeet says:

    I don’t recall the person who said it, but it went something like this: young people are liberal and old people are conservatives. Well, my life has been backward in that regard, I used to be a firm supporter of the GOP and the conservative agenda (of course, that was over a decade ago before the GOP was revealed to be a tax-cut and spend organization; at least the democrats upped revenues when the spent!). Though personally I have made little use of the public safety net (I seem to have slid right through the holes most of the time), as I get older and more crotchety I more and more believe that a strong social safety net is critical and that without upward (and downward) mobility we slide into a feudal society (well, I should say ‘slid’ since I think we are already there), which, based on my study of history, is incredibly stable and long enduring.

    I _really_ object to Obama’s shredding of the Constitution, but I am convinced that Romney would continue the Bush/Cheney/Obama abuses (or try to out Obama Obama to our continued detriment), but pretty much _everything_ that has come out of Romney’s mouth has convinced me that he would pour concrete around our nascent feudal society.

    Too bad there is no ‘none of the above’ option this November.

  2. Andrew says:

    Whether people pay taxes or not is irrelevant. Taxes are divisive, and we should probably admit that the government doesn’t need our money in order to spend and get on with business.

    The bottom line is that most people need services that aren’t easily provided by the private sector and we have government to provide those services. But maybe people are longing for the good-old days when children only went to school if parents could afford it, all roads were toll roads and old people were on the street begging if they didn’t have family to care for them.

  3. azlib says:

    You point out rightly that the 47% do not pay taxes meme is meaningless. Framing the debate in those terms makes the debate a dangerously static one. Living is a dynamic enterprise fraught with risks. Just because you are retired and do not pay income taxes now does not mean you were retired all your life and did not pay into the system at some point in time.

    If you were unlucky enough to be permanently disabled at a young age by an accident or illness, does that mean we put you down like a dog because your personal wealth is insufficent to cover your care? Of course not, but that is where the YOYO mentality logically leads. Romney’s vision for our country is not only cruel, it is morally bankrupt.

  4. Mike says:

    I also quite like Dean Baker’s take of this whole thing, where people take a very narrow view of what a “government benefit” is. Companies like Pfizer and GlaxoSmithKline benefit quite a bit from strong patent protection; when we pay inflated prices for their drugs, that is in effect redistribution up the income scale. When trade agreements place US manufacturers in competition with foreign ones, but exempt doctors and lawyers, that also helps the well-off people in those distinguished professions. And tax expenditures such as the carried interest exemption help individuals like Mitt Romney, and function the same as a signed check from the government. So if you want to look at the largest beneficiaries of government redistribution, don’t look at the unemployment man on SNAP.

    I do agree with that last paragraph of yours though Jared. Once the nat’l conversation gets bogged down into “makers” and “takers,” it’s very easy to get certain portions of the population resentful and get people to lose sight of the practical things that the government can do to ensure everyone has an opportunity to succeed. I’m hopeful though; the President seems to understand YOYO vs. “in this together” and is willing to defend those ideas (and programs) that he and his party believe in.

  5. John T says:

    If I was a Romney advisor I would get him to say as little as possible until November. When he speaks he reveals who he really is.

    • Jake says:

      My take on Romney is that he is the prototypical “civic-minded” business person whose primary goal was to build a successful business for the benefit of his family and himself. Once that was done, such people turn to community service to stay busy. This is good, but is a narrow view of what makes up a society. I get the impression that he sees the non-business owner as objects there to be served by his good intentions as long as those intentions are fenced in so they don’t get in the way of business.

  6. David G. says:

    That we are expected to pretend that we are pleased to be having this “debate” should turn a decent person’s stomach.

  7. Wynter says:

    I have to agree with you. The conservative’s anti-government, anti-taxes approach doesn’t quite agree with their “everyone can be rich” theme. We all need some support throughout our lives to achieve our goals. People that have already reached the top don’t recognize (or maybe they do) that this support is essential to our working society. The markets don’t do everything perfectly and in many cases they don’t anything at all. This is where we have government support the public in a broad way. What it looks like to me is that the private sector is trying to claw back some government managed areas of our society because they finally see some profit in it. But unless they can figure out a way to do it faster, cheaper, or better then it’s not going to be privatized. Private enterprise is only in it for the money. They don’t care about providing a service for the public. So if the bottom fell out of the newly-privatized service they would just go bankrupt and move on to something lucrative elsewhere. Government managed services don’t go away. This is why some things must stay the way they are. And why Healthcare should start going towards a government managed structure. The high end healthcare will always be private enterprise, but we can’t allow basic healthcare for all citizens to be ignored due to profit taking corporations. We need a stable healthcare system.