Inequality by Half Measures
In the discussion of inequality by Roger, the issue of the Rector Testimony is brought up. Rector is a Heritage Foundation… employee… who asserts that through various governmental programs, a “poor” person could theoretically receive $44,000 each year in government benefits by combining obligatory programs with “means-tested” aid.
Unfortunately for Rector and Roger, the assertion simply didn’t hold up to scrutiny. The actual quote from the Rector testimony relevant to the discussion is this:
“If converted to cash, means-tested welfare spending is more than sufficient to bring the income of every lower income American to 200 percent of the federal poverty level, roughly $44,000 per year for a family of four.”
Now, this measurement is accomplished by simply taking the entire budget of the programs Rector was condemning. In the very previous paragraph, he acknowledged that many of the programs did not merely aid the poor, but low-income groups in general.
His calculation also assumes that “a family of four” is drawing the maximum from Social Security, Medicaid, Medicare, and all 89 programs simultaneously. Sadly, the precise quote from that earlier discussion is difficult to find (the League’s search engine does not search comments, it appears) so I’m going to paraphrase the consensus from earlier: it is impossible for someone to do this. It would require drawing full Social Security benefits, full Medicaid, full Medicare, AND navigating the paperwork for:
12 programs providing food aid,
12 programs funding social services;
12 educational assistance programs;
11 housing assistance programs;
10 programs providing cash assistance;
9 vocational training programs;
7 medical assistance programs;
3 energy and utility assistance programs; and,
3 child care and child development programs.
Clearly we need more specifics. We can find some of them in Rector’s vitriol-laced paper from 2009, a partisan wreck that starts out as an attack piece and goes downhill from there. In it we find:
- Rector considers the Earned Income Tax Credit, taken by more than 90% of Americans, a “means tested cash aid” program. He does the same for the Additional Child Tax Credit.
- Down in the index, he finally gets round to listing the programs he considers “welfare” entirely. Under Cash he includes EITC, ACTC, Foster Care Title IV, Adoption Assistance Title IV, “General Assistance to Indians”, and Assets For Independence, a federal program to provide assistance to community organizations providing antipoverty programs.
- Under Medical there’s Indian Health Services, Community Health Centers, Healthy Start.
- The food program list goes all over the place. He breaks out School Lunch, School Breakfast, the Summer food programs, Child Care Food Program, and Special Milk Program separately when they are all part of the national educational food initiative.
I could probably waste far too much time analyzing the list, but the point is: even under that short list we can see how it’d be impossible for a single family to pull in all benefits from all programs at once. They’d have to be a pair of seniors pulling in full SS and SSI funding, living in a nursing home drawing full Medicare and Medicaid, raising at least two children below the age of 10, getting the children on every single educational and food aid program, pulling in urban and rural housing assistance simultaneously, and also members of an indian tribe living on-reservation to pull in the various benefits the US government is obligated to provide to the tribal members currently. There are a whole host of other contradictions and mutually exclusive programs in the scenario required to get “$44,000 in aid to a family of four.”
Can we all just agree now that Rector’s numbers are total fishing BS?
Mike Schilling also brings up the point of Vimes’ Theory:
At the time of Men at Arms, Samuel Vimes earned thirty-eight dollars a month as a Captain of the Watch, plus allowances. A really good pair of leather boots, the sort that would last years and years, cost fifty dollars. This was beyond his pocket and the most he could hope for was an affordable pair of boots costing ten dollars, which might with luck last a year or so before he would need to resort to makeshift cardboard insoles so as to prolong the moment of shelling out another ten dollars.
Therefore over a period of ten years, he might have paid out a hundred dollars on boots, twice as much as the man who could afford fifty dollars up front ten years before. And he would still have wet feet.
Owning a somewhat old car, but having purchased it when it was a late-model new car still under warranty through a certified-used program, I’m very sympathetic to this issue. For approximately 3 years, all my major maintenance for the car was covered, though I was paying the balance of the car note; for another 2 years, I was lucky enough to have no major issues. With the car paid off now and owning a decade-old car, I budget roughly $1500/year to keep it running. Were the maintenance on the car to hit double that, it’d be time to start looking at a new vehicle as it’d be an indication that the car was structurally unsound and about to become a major money sink.
A friend of mine, who is economically worse off than myself, recently had to buy a car. They wound up with a car a couple years younger than mine, but with far more maintenance issues already. They paid approximately 25% less for their car than I did for mine up front, with a reasonable chunk (25%) down payment. Then, the maintenance issues came into play. The cars they could afford up-front costs for are money sinks requiring some significant maintenance, and it’s only through the goodwill of myself and a few other mechanically inclined friends willing to donate our time/labor, scouring junkyards for parts and making the repairs for the cost of “cover the part and heat up a frozen pizza for lunch”, that the car’s been kept in a usable condition. Someone in that position without friends willing to do so, paying hourly labor rates at a mechanic shop, would be sunk.
We’ve discussed a lot about the concentrative effects of certain policies. There’s the preferential treatment of the primary mode of wealthy class income (“capital gains” taxed at most at 15%) versus the primary mode of middle class income (wage income, taxed higher), the repealing of the estate tax (which allows passing greater and greater advantages in hoarded wealth), the fundamental upwards-redistributive implications of the banking and stock market systems as rigged by the wealthy with their thumb on the scales. But we haven’t really discussed the downward pressures inherent in out-pricing the lower or middle class into a state where in many categories they can only afford the up-front costs for necessity items that are long-run money sinks.
It’s easy to say “well a car should only cost you 5 grand, then you should be saving up for a late-model that will run you 12 to 15 grand as your next car.” It’s much harder when realizing that while the up-front cost of that $5k car is only $5k, the 5-year cost may be as high as $12k anyways. If I can afford that $12k up front, sure I can afford to set aside $1.5k a year towards my next purchase – but if I can barely scrape together the down payment on a $5k vehicle, which I desperately need to get to/from my workplace? The poor are entrapped and enslaved by the rich, running the Red Queen’s Race economically.