After reading my equity and eligibility posts, perhaps you have reached the same conclusion I that have: as government has become increasingly complex, it has also become increasingly unfair. More and more, we find that eligibility rules (or decisions made outside formal rules) favor the better off, the better organized, and the better connected – and those with a greater sense of entitlement. Once the growth of government, as a share of the economy, stopped, the trend has been for the number of beneficiaries to fall even as the benefits available to those in a position to access the system – through direct benefits or tax breaks – increases. And as the debts and pension promises of the past continue to bite, it is basic services for the majority and basic needs for the worst off that suffer, not extravagances for the influential. Equity, fairness, even decency requires that this trend be reversed. Some services and benefits should be made universal. Others should be eliminated. And younger generations have to be treated fairly. Otherwise, we are going to see general strikes in this country by a majority of people with nothing left to lose. That is why equity and simplicity in government was one of my four main themes when I became disappointed enough to run as a protest candidate for state legislature several years ago, as I described in this essay http://ipny.org/equalpro.html .
Health care finance is an example of a public benefit that should be universal. There is simply no excuse for anyone to lack publicly financed access to basic health care, even as they are forced to pay taxes for more extensive benefits for others. Nor is it reasonable to call universal health insurance an expansion of government when the government is already covering, directly or indirectly, such a high share of total health care spending. If all the direct and indirect public funding flows were consolidated in a single system, everyone could be assured of a reasonable level of basic health care, without an increase in public spending overall. Everyone could be permitted to purchase additional health care and/or insurance, if they could afford it, on their own — without tax breaks and subsidies. Or people could make voluntary donations to ensure that others receive health care beyond the socially guaranteed minimum. The government’s role should be to provide the minimum, for everyone, equally, not to provide far more than that for some and nothing for others.
Federal housing assistance – both via spending AND via the tax code — is an example of a benefit that should be phased out. Too few people benefit from direct spending on housing programs, while those who benefit most from tax-based housing subsidies are affluent enough to be able to purchase housing without such assistance. These have merely encouraged such people to spend their money on McMansions instead of other things, instead of saving. The mortgage interest deduction could be phased out over a decade, by reducing the share of interest paid that may be deducted by ten percent per year. Section 8 housing vouchers could be similarly phased out by increasing the percent of a beneficiary’s income that must be applied to rent by one percent per year, and by not issuing new vouchers. Operating subsidies for public housing could be phased out by increasing the share of income that must be applied to rent, and by requiring all new tenants to pay at least the operating cost of the unit, plus a reasonable capital reserve. Once rents were covering operating costs, federal public housing projects could be turned over to local governments that operate them without subsidies or restrictions. State and local governments could decide how, and for whom, they wish to subsidize housing.
The federal spending and tax expenditures no longer applied to housing and existing health care programs care could be diverted to universal health care. A single, universal federal public health care finance system, combined with the elimination of federal housing subsidies and grants, would lead to a vast simplification of government administration at the federal, state and local level. The amount of money state and local governments saved due to federal coverage of a substantial share of employee and retiree health care, and today’s state and local share of Medicaid, would more than offset any additional money they would choose to spend on other things. Absent such a policy, in fact, retiree health care and pensions could bankrupt state and local governments throughout the country, leading to drastic tax increases and massive service cuts and adding to the “older generations get everything and younger generations pay and get nothing” trend.
Other benefits could be similarly consolidated and simplified. Federal, state and local governments provide a vast array of tax breaks, cash benefits, and near-cash vouchers intended to assist parents with cost of raising children or caring for elderly adults. These include cash grants under Temporary Assistance to Needy Families (welfare), food stamps, and the Earned Income Tax Credit (EITC) for the poor, and per child and child care income tax exemptions, deductions and credits for the non-poor. Typically, the value of these benefits rises with the number of persons in the household, and (like health care) these benefits are allocated under many programs based on many different criteria – age, means, needs, the golden rule, etc.
In 2002, a the food stamps and welfare benefits available to a parent of two children in New York State were $2,400 per year higher than the benefits available to a parent of one child. And the federal, state and local income taxes paid by a parent of two children in New York State who earned $90,000 were $2,000 lower than a parent of one child, as a result of the deductions. The combined benefits and tax breaks per child were $3,100 at $10,000 in income per year, $1,600 at $20,000, and $2,000 to $2,200 from $25,000 to $90,000. Above $90,000, benefits per child phased out until they reached $680 at $140,000 in income or more.
Why not just replace the additional welfare, food stamp, and EITC payments for dependents and all the tax benefits and credits for children, and replace them with a single subsidy of, say, $2,400 per year, which could be either received in payment or deducted from taxes due? One simple amount that the government provides as assistance with raising a child, or perhaps an elderly parent with self care limitations forced to move in with her children? Everyone would know about a single benefit per child, which could be triggered by the issuance of a birth certificate – like the universal basic health care benefit. The single subsidy per child would be more than what the wealthiest receive today, but this could be offset by an increase in their marginal tax rate. Though there would be no practical change, theoretical fairness would increase. It is one thing for the government to say that the affluent ought to be asked to pay more, another for it to say that their children are worth less.
And what about the government’s need to ensure the welfare of children by controlling the spending decisions of irresponsible adults? Food stamps, housing vouchers, and other non-cash benefit could certainly be substituted where necessary, but there is no reason to go through the hassle of handing out non-money to everyone in order to control the least responsible.
What about cash grants for the disabled and unemployed, and children who require additional assistance at school as a result of learning disabilities? Does equal protection require that everyone receive such assistance, or no one? Certainly there are many whose disability is so clear and indisputable that there is no reasonable objection to with providing them with benefits and services that most people do not receive. For those whose needs are less obvious, however, practical experience has demonstrated the near impossibility of having government officials, and the political process, allocate benefits based on means and need. Such allocations tend to be subjective and inconsistent at best, dishonest and politicized at worst. A different method must be found to determine eligibility.
The fairest method that I can think of is self-selection – limiting eligibility to those who are willing to give up something in exchange for receiving a public benefit that others do not.
The best example of this is “workfare,” the fair and equitable component of welfare reform. Fair and equitable because virtually everyone else has no choice but to work, for the benefit of others, in order to earn a living. It was inequitable for welfare recipients to be exempted from this obligation. To achieve additional equity, and get around the dilemma of aiding the fraudulent or denying the truly needy, the government could impose the same obligation — work in exchange for benefits — on the mildly disabled, injured workers, and the unemployed.
The value of work done by the truly disabled and injured would, in general, be worth much less to the public than the cost of organizing and managing it, and it would not be, in all likelihood, particularly rewarding. Critics, therefore, could say that workfare for the disabled and injured would be both expensive and cruel. On the other hand, many of those critics would probably say that the investigations and personal intrusions required to insure that the injured, the disabled, and the unemployed really cannot earn a living on their own are also expensive and cruel. The opposite choice, an open ended assumption that anyone who says the cannot work should not have to, has proven to be unfair – to the working poor – and expensive in the long run. Those who are willing to work for the minimum wage in exchange for benefits clearly cannot do as well or better without assistance, or they would. There is no need to investigate further, no need for hostility, no need for suspicion. Self-selection through work in exchange for benefits is, in fact, the easiest form of assistance to the needy to administrate fairly. Either someone is willing to work, or they are not.
Self-selection through a work requirement avoids liberal and conservative assumptions that imply that those in need of assistance are something less than full human beings. To many liberals, the poor are like puppies that need to be cared for, but cannot be expected to contribute anything in return. To many conservatives they are like rats, vermin spreading pestilence through society while having no value. If those seeking assistance are considered human beings, then equity requires that the rest of us have obligations to them, but they have obligations to the rest of us as well. Far from being demeaning, work-based assistance puts those in need, either temporarily or indefinitely, on an equal basis with other people.
Self-selection could be used, as well, to determine which children are learning disabled and require additional educational services. Such children could be placed in regular classrooms, as they were prior to 1980s, but provided with additional instruction after school and in the summer. The children and their parents would have to give something up – more time – in order to get something that other children do not – more educational services. Schools and their employees would also have to give something up – more work and services – to get additional funding for the learning disabled. Designating additional learning-disabled children would no longer be a cost-free route to higher funding, since additional services would have to be provided in return.
As I wrote last year, I even believe that self-selection could be used to ration care for senior citizens, the most difficult issue we face today. Today, those who are cared for by friends and family members often get nothing. In New York State those who failed, in the course of their lives, to either save up enough money to pay for care, or to do enough for those younger, their own children or others, that someone feels an obligation to take care of them, get everything – all kinds of care at home, paid for by the government. How fair is that? Instead, I would limit publicly funded at-home health and personal care to those who were forced to move in with friends and relatives who agreed to be responsible for them, as a supplement for the care of those friends and relatives. The publicly-financed alternative would be nursing home care with double occupancy or more, not because that is the ideal, but because that is something people will not choose unless they have no choice. With a self-selection controls in place, the current practice of means testing benefits for seniors with self-care limitations, and all the games to get around it (spend-down), could be eliminated. Of course, all kinds of regulation will be required to make sure that people are not ripped off by long term care providers, whether publicly or non-publicly financed.
Finally, what about public benefits and services that are allocated based on “a fair and through evaluation?” The public sector would be more equitable, and simpler, if most of these were simply eliminated, especially at the federal and state levels. At a time when the richest nation in the history of the world seems unable, or unwilling, to guarantee its people’s the basic needs, there is no reason to tax people for merit-based expenditures. The current recipients of such expenditures should have to convince buyers, investors, charitable contributors, and local taxpayers to fund them instead.
Some of those working in, or just working, the system defend the gradual accretion of programs, grants, rules, and formulae over the years as an appropriately sophisticated and nuanced response to a diverse and complex society. The reality is far different. Public agencies never have the resources and personal, intrusive information required to direct perfectly appropriate combinations of benefits and assistance to each person based on the totality of their circumstances, and elected officials would never allow them to. Perhaps voluntary charities, with the right to grant assistance only to those who comply with certain standards and accept certain constraints, and the ability, therefore, to investigate people in detail, can adjust assistance and benefits to the specific circumstances of each person. In government, however, the actual result of complexity, if not its real purpose, is to provide different benefits for those in the same situation. Progressive-era programs were simple and equitable. So was much of the New Deal. Not so much of what has happened since, either in government programs or in the tax code, save for the bipartisan tax reform of 1986 that was quickly reversed as politicians of both parties chose hand outs to the influential as the path to gaining and retaining power.
Anything that isn’t simple is a ripoff, incompatible with both equity and freedom. And morally, we are either all in it together, or we are not. If we are, then those at the bottom deserve better treatment, and more respect, then have been given for the past 25 years. Younger generations even more so. If we are not, there is certainly no reason for the government to take my money in taxes and redistribute it to those who earn (or at least spend) more than I do. I’ll take either the McGovern or the Goldwater solution over what we have now.