Joe Biden, welfare king
Will he be the president who realizes Americans love government money?
The 2005 film Cinderella Man, about a Depression-era boxer, includes an instructive segment about American anti-welfare ideology. Early in the film, Russell Crowe's character, James Braddock, can't box because of an injured hand, and he can't get work thanks to the national economic crisis. He is forced into accepting welfare payments, which is shown to be profoundly humiliating. Then, when he returns to boxing and finally gets paid, he carefully pays back all the relief money he received — restoring his masculine pride as a father who takes care of his wife and children by earning money through work.
For decades this type of thinking has been assumed to be nearly universal among Americans. And that assumption is a big reason why the American welfare state is so weak. Frightened of waking the anti-welfare, anti-government beast, Democratic politicians have built convoluted means tests into their programs to make sure only the "deserving" receive benefits, or hidden them in the tax code out of sight, or both.
But it turns out that, when given the option straight up, the American people overwhelmingly support getting free money from the government. Joe Biden's presidency could be one in which the toxic ideological bias against a proper welfare state and active government dies an extremely deserved death. Free money is both good and fun!
The side effects of the anti-welfare prejudice can be seen in the trap that center-left politicos often back themselves into trying to appease it. It goes something like this: We're designing a new program to help the poor. In keeping with laissez-faire notions of the self-regulating market, which views government programs as an imposition on the preexisting economy, we assume that welfare payments are an immoral, unnatural drag on production, and hence only the very needy should get them. Thus we need to cut the middle class and the rich out, because we don't want to waste public dollars on people who aren't truly desperate. But on the other hand, we need to require recipients to earn at least some money from working to qualify, because otherwise we'd be undermining the incentive to work, thus possibly undermining the economic base on which the program depends. (The right primes everyone to believe this with a lot of racist stereotypes about single mothers and insinuations that people are only poor because they choose to be.) Hey presto, we just created an inefficient, annoying program that leaves out the people who need it most (the very poor who do not work at all), stokes resentment among the non-poor, and stigmatizes its recipients.
Such programs are often called "trapezoids" because that is the shape created by the phase-in and phase-out schedule — leaving out both the rich and the very poor. Claiming the trapezoid benefit requires a lot of obnoxious paperwork, so even a big chunk of eligible people don't actually get it. Then many middle-class people perceive their tax money as mostly benefiting others, so they get annoyed or use it as fuel for racist agitprop about how minorities are all living off the government dole. This isn't hypothetical, either. According to the IRS, some 22 percent of eligible people do not actually receive the Earned Income Tax Credit. Similarly means-tested programs like food stamps or Medicaid inspire resentment among people who don't receive them.
If you talk to center-left wonks about the problems with trapezoids, they will often agree. But they generally point to the aforementioned anti-welfare bias as the reason they simply can't be done. Better trapezoids than nothing. And I think in decades past, they may have been right. Even Franklin Roosevelt felt the need to disguise Social Security as some kind of savings program, instead of a simple welfare payment for retirees.
But the coronavirus pandemic has broken the seal on good old-fashioned welfare, in the form of the much-discussed direct assistance checks that were included in the CARES Act and then again in smaller form in December's appropriations bill. Now, these were not truly universal, because they phased out at the top of the income ladder. But everyone else got them, and more importantly, they did not have to do anything to claim them. Despite some delays and technical difficulties, most Americans did indeed get their checks in the mail, or deposited straight into their bank accounts.
It turns out Americans love getting free money from the government. A poll from May 2020 found that 82 percent were not only happy with the checks, but wanted them to be sent out on a monthly basis so long as the pandemic lasts. Another poll in December found 78 percent supported the idea of $2,000 checks, as was being discussed at the time. In both cases, even a large majority of Republicans supported the idea.
The checks were only a modest portion of the various pandemic relief packages, but they seized public attention to an extent that made economics journalists despair. The grant program for small businesses was huge, as was the Federal Reserve lending program, but few noticed them compared to the checks. This has to be because they were so obvious. For the vast majority of people, the checks were surely the most blatant, direct, and easy form of government assistance they had ever seen in their lives. No application process, no paperwork, no filing your rotten taxes, just $1,200 in hand courtesy of Uncle Sam. A whole nation blearily came to the realization that the government can just send you money, for free, and moreover, nothing bad happens when they do. There was no instant spike of inflation, no destruction of jobs, no plague of locusts, and the sky did not fall. A whole vast edifice of libertarian agitprop about how "there's no such thing as a free lunch" was vaporized at a stroke because, yes, there is.
I argued previously that Biden's proposed expansion of the Child Tax Credit really should be a universal child allowance. It would be simpler, easier, more technically efficient, more fair, and more obvious. If such an allowance were established, within months it would be so popular as to be politically untouchable. Future parents would love their Biden Bucks — credited to Biden himself and the government, so parents could not pretend they weren't getting welfare because the payment came in the form of an obscure tax break instead of a check.
But this general lesson applies across the board — and there are a slew of similarly goofy programs that could be streamlined or rationalized along these lines. For instance: Programs to assist homeownership really should come in the form of universal vouchers for both renters and owners, not the mortgage interest deduction, which is mostly claimed by the rich. The failed 401(k) experiment should be scrapped, and Social Security retirement pensions beefed up instead (particularly by boosting the minimum benefit). Social Security disability benefits should be beefed up, and the brutal qualification requirements removed. Unemployment benefits and Medicaid should be centralized at the federal level, and the application process simplified or removed where possible. And so on.
If President Biden and congressional Democrats learn to stop worrying and love free money — it's great! You can buy things with it! — they could help the American people, cement their popularity, and maybe even help the United States take its place among peer nations as a basically decent place to live.