Rhetoric Vs Reality on Entitlements

February 10th, 2012 at 2:42 pm

My CBPP colleagues just released an excellent piece of analysis on who benefits from entitlement programs.  The findings blow a huge hole in the conservative meme that the nation is becoming an “entitlement society,” in which some undefined–but presumably large—share of healthy, young Americans live on the government dole rather than hard work.

Gov Romney, for example, recently warned of:

“…the dangers that the nation faces from the encroachment of the ‘Entitlement Society,’ predicting that in a few years, ‘we will have created a society that contains a sizable contingent of long-term jobless, dependent on government benefits for survival.’ ‘Government dependency,’ he wrote, ‘can only foster passivity and sloth.’ Similarly, former Senator Rick Santorum said that recent expansions in the ‘reach of government’ and the spending behind them are ‘systematically destroying the work ethic.'”

Newt Gingrich taps the same meme with his efforts to label President Obama “the food stamp president.”

Well, the problem is that the rhetoric fails to match the facts—by a long shot.  Over 90% of the benefits of entitlement spending goes to people who are either elderly, disabled, or in working households.  That’s right, folks: according to the data, this encroaching menace—entitlement spending that goes to lazy, healthy, adults—accounts for 9% of total entitlement spending.*

As the figure shows, 53% of benefits went to elderly persons (65+), 20% to disabled, non-elderly, 18% to non-elderly, not disabled working persons (working at least 1,000 hours over the course of a year), leaving 9% who plausibly fit the mould of the meme (non-elderly, non-disabled, non-workers—meaning working-age people who worked less than 1,000 hours).

Shine the light of facts on it, and the image of a nation of healthy, working-age people flush with government cash quickly fades to smoke.

The paper makes another interesting point about all this.  If you’re looking to get upset about spending going to undeserving types, you’d be better off looking at tax expenditures as opposed to entitlement spending.  The figure below shows that distribution of the $1.1 trillion in tax expenditures, like the mortgage interest deduction, employer-paid health benefits, and favorable tax treatment for capital gains and stock dividends.  Two-thirds of those benefits go to the wealthiest top fifth of households and 24% to the top 1%.

Based on his tax returns, Gov Romney himself resides in that top 1%, where he is a primary beneficiary of the largesse of this part of the tax code.

In other words, to the extent that he and others want to go after “the entitlements,” I’d urge them to go after the ones we dole out through the tax code.

But don’t hold your breath.

*“Entitlements” in this analysis include Social Security, Medicare, Medicaid and CHIP, unemployment insurance, SNAP, SSI, TANF, the school lunch program, the EITC, and the refundable component of the Child Tax Credit.  Entitlement, or mandatory, programs are distinct in the budget in that by law they are funded not by annual appropriations, but by permanent authorization.  Thus, this part of the budget must expand and contract on the basis of eligibility and need, not annual appropriations.

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6 comments in reply to "Rhetoric Vs Reality on Entitlements"

  1. Bob Walling says:

    Clear! Concise! Easy to read and understand! This puts the peanut at the elephants face.

  2. Chris says:

    I didn’t see that the CBPP pulled out minors, so are minor children included in the 9% of non-elderly, non-disabled, non-working people? I know Newt wants those slacking 6 year olds put to work, but no one thinks that 🙂

  3. perplexed says:

    I’m afraid the conservatives are absolutely right on this one, we have become an entitlement society. But every time we discuss this, we need to include ALL of the entitlements. Not just by adding tax expenditures as you so well point out, but also adding patents, copyrights, trademarks, trade restrictions, licensing restrictions, free liability insurance to corporations, free TBTF insurance to banks, and other government-granted monopoly entitlements as well. When these are included in the pie chart it will be extremely obvious that all others pale in comparison and that the conservatives are on the right side of this argument (for a change). We need to stop ignoring this elephant in the room; we can’t solve the health care cost, debt, middle class squeeze and inequality problems if we simply refuse to acknowledge and discuss the reality of it.

    Dean Baker has done a wonderful job of summarizing and quantifying these entitlements in his new book “The End of Loser Liberalism,” which is available for free under a creative commons license so there is no excuse for not reading it. Its time to shake off the loser liberalism moniker and let the conservatives know we are in agreement with them on this one; these entitlements needs to be reduced and we need to start with the most costly and least beneficial ones. When those are all gone we can look to reduce those that support the the needy among us (if there’s any longer a need to do so, which is extremely doubtful). Only when the conservatives are met with this response, and these facts, will they stop raising this issue. If they can’t argue that making the wealthy wealthier will somehow solve the Nation’s problems they will quickly lose interest in the argument will look for an easier path; once again leaving real solutions to others.

    The great strides that liberals have made throughout history have not come from being pacifists or losers; unfortunately, they’re almost always battle victories.

  4. Geoff says:

    What is both interesting and alarming is the lack of reason,logic and analysis that is applied to policy decisions as presented to the populace in support of public policies.

    Mostly what is presented (by both sides) are a mantra of sound bites designed to brainwash the public.

    The presumption here is that logic can move followers of faith based positions (the other side) off those points of view.

    To me this is the fundimental flaw of this approach, since faith based thinking does not accept rational logical approaches to problem solving.

    The dark ages are upon us once again.

  5. Fred Donaldson says:

    So-called entitlements for the working poor mostly provide enough food so they can go to work the next day at a job that doesn’t pay enough to eat. The subsidy is to the business that underpays, not really to the underpaid worker.

  6. Auros Harman says:

    I’ve heard a number of conservatives claim that some large portion of the people who are receiving “disability” benefits are actually faking, with the help of doctors. (According to the conspiracy theory, the doctors have an interest in pumping up the number of “disabled” people b/c they can then “treat” the people for gov’t checks themselves. It’s all very loopy.)

    Facts do not penetrate their ideology.