Why It’s So Hard to See Eye-to-Eye on Entitlement Spending

Alden Wicker
Posted

Strictly defined, entitlements are benefits that you have a right to by law, including everything from Social Security to Stafford educational loans. But many people see “entitlements” very differently–as a petulant demand for services and benefits by unmotivated people who don’t want to work.

RELATED: I Was a ‘Lazy Welfare Mother’

How would the numbers change if college grants and loans (which go to students who are expected to become contributing members of the professional class), veteran’s benefits (which are seen as a reward for putting your life on the line for your country) and Social Security (which you pay into as you work) were removed from the question?

This distinction was displayed during a December episode of conservative Rush Limbaugh’s radio show, when a caller said, “I don’t have a problem with people that have paid into government programs like Social Security or Medicare, like my mother-in-law who lives with my wife and I because she’s 76 years old. She has earned her Social Security and her Medicare benefits. But I have a problem with people who receive other benefits, such as Plus cards or food stamps.”

Another survey conducted by Cornell University’s Suzanne Mettler points not just to a distinction, but what appears to be a form of denial. When asked if they had ever used a government program, the majority of respondents said no. But when they were questioned further about specific programs, they admitted to using services that ranged from student loans to welfare.

(Full disclosure: If you had asked me before writing this story if my family had ever benefited from entitlements, I would have said no, too. Then I remembered that my family received Social Security checks until I was 18 following my father’s death.)

The researchers posit that some services and benefits are administered in a way that doesn’t make them seem like “government services,” but simply tax discounts or private loans. They call these types of benefits–loan subsidies, retirement benefits and deductions–”submerged benefits.”

For example, a home mortgage interest deduction is a government benefit because it costs the government money, and puts money back into your pocket. But, to you, it’s just a line item on your tax forms that an accountant fills out for you. Unlike receiving food stamps or welfare, you hardly know it’s there–even though it’s worth thousands.

Not Just for the Needy, Anymore

Another reason for the confusion and denial surrounding government social programs has to do with a steep shift that has taken place over the past few decades regarding who actually receives them.

It used to be that social programs were designed to benefit those living on the edge of abject poverty. Today, they’re also helping to keep the middle class, well, in the middle class. In 1979, the bottom fifth of earners received 54% of government benefits. In 2007, they received just 36% because as the middle class has needed more help, a greater proportion of government payments have gone to the top 80% of earners.

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Middle-class recipients, conditioned to view government programs as “handouts” for non-working people who can’t support themselves, are naturally confused and upset when confronted with the fact that, yes, they do benefit from government services. When a New York Times reporter visited a typical middle-class county near Minneapolis last year, and asked residents about government spending, interviewees pointed to “other people” as the cause of out-of-control government spending. But after a long dialogue, they came to the realization that, while they wanted the government to cut services, they also needed social programs–like the earned income tax credit and Medicaid–to someday take care of their families.

“It’s hard to beat up on the government when they’ve been so good to you,” one interviewee said. “I’ve never really thought about it, I guess.”

Given this, it’s no wonder that it seems hard for the government to get its act together and stop spending so much. Imagine you’re the politician who’s hearing, “Cut government spending!” But whenever you make a move to do so by, say, cutting off unemployment after a certain time, the same people rise up–and vote you out of office.

This issue is far too complex for us to offer a comprehensive solution. But one step in the right direction could be to simplify the tax code–and how benefits are doled out. The study out of Cornell also showed that the more obvious benefits were to people, the more aware they were of actually using them. Of the eight most “submerged” benefits mentioned earlier, seven were tax subsidies.

Cornell entitlements

So imagine if, instead of getting subsidized student loans in which the government pays the interest, students were handed a cash allowance while in school. We’re not saying that this is necessarily the best way to subsidize education, but it would make crystal clear that students receive government benefits … and how much, exactly, it costs the government to encourage higher education. Perhaps, with these kinds of changes adopted, lawmakers could then have a discussion about government spending and taxes that’s grounded in reality.

  • Alexandra

    Its interesting things like Tax Credits and Home Mortgage Interest Deductions are considered “benefits.”  They are just certain qualifications that lower your taxes.  I would argue that that is something closer to a tax cut than an entitlement.  But its worse than a true tax cut because it just makes the tax code more complicated which is more expensive for the government to monitor and more expensive (in both time and/or accounting costs) to citizens to take advantage of.  

  • Melodie

    How about they put the money back in Social Security retirement that they’ve ‘borrowed’ and all the interest that would have accrued had they not ‘borrowed’ it, and stop calling it an entitlement.  It’s bad enough they make people pay taxes on Social Security which is a tax, but now everyone conveniantly forgets the only reason SS retirement it’s going to run out of money is because the goverment ‘borrowed’ out of it.

  • Cindy

    I find it strange that all of the government ‘benefits’ are considered ‘benefits’, when the government couldn’t exist without the taxes we pay in. So basically we are getting back a little of the money we work so hard to earn (those of us who work).

    • CrankyFranky

       I like the presumption by most US folk that they are independent free-entrepreneurs who rely on no-one but themselves – the article shows how easily overlooked many government benefits can be, especially if you are on the side that prefers to blame government for everything – forgetting that government tends to be ‘of the people, by the people, for the people’.  So when you’re pointing the finger, perhaps turn it around and point at yourself – you tend to get the government you deserve.