(August 2014) Entitlement, Outrage, and the Poor

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Warning: this is lengthy.

I saw an “info”graphic on facebook the other day that really got under my skin. To the surprise of no one, it was about politics. More specifically, it was about prosperity politics. Entitlement on behalf of some people who believe that government assistance is akin to stealing from the hardworking and giving to the lazy. It proclaimed these “5 truths no one can disagree with” –

  1. You can’t legislate the poor into prosperity by legislating the wealthy out of prosperity.
  2. What one person receives without working for, another person must give without receiving.
  3. The government cannot give to anybody what it does not first take from somebody else.
  4. You cannot multiply wealth by dividing it.
  5. When half the people get the idea that they don’t have to work because the other half is going to take care of them; and when the other half gets the idea that it does no good to work because somebody else is going to get what they’ve worked for, that is the beginning to the end of any nation.

First, what “half” are we talking about here? In what way can our country, other than by biological sex, accurately be classified into two halves? It’s tricky. I assume the creators of these “truths” are referring to economic classes – the wealthy and the poor – to illustrate how poor people are money-sucking leeches. Okay. Let’s examine. What percentage of the USA is wealthy, and what percentage is poor? According to the Census Bureau,

  • 15% of the US population lives below the poverty line. We call this “lower class.” It’s classified as earning less than $11,000/year as an individual or $23,000/year as a family.
  • Then comes “blue-collar/working middle class” – earning between $24,000-$32,000/year
  • White-collar/middle class is next – $32,000-$60,000/year
  • Upper middle class – income often about $100,000/year
  • The “5%” earning over $150,000/year
  • The 1% – earning over $250,000/year

The last three groups – upper middle class, the 5%, and the 1% make up the top 1/3 of American’s income-earners, leaving the blue-collar and white-collar middle class to make up the remaining 52% percent of the economic class. Those are three groups, not two.

One way you can classify the population into halves is by looking at who receives federal government assistance or benefits. In 2011, about 49% of US households were receiving some kind of “direct benefit” from the federal government. Who are these leeches??? (Keep in mind there is some overlap between the beneficiaries in the categories below, the lazy bastards.)

  • 27.1% were receiving Medicare benefits
  • 31.6%  received Social Security
  • 19.5% were receiving Medicaid benefits
  • 12.7% received SNAP benefits (food stamps)
  • 11.2% received subsidized school lunches
  • 5% received assistance for public housing
  • 4% received unemployment benefits
  • 2.6% received veteran’s compensation
  • 7% of households received a form of cash assistance for various programs

So, this group of lazy bums suckling at the teats of the wealthy upper “half” of the population includes retirees, veterans, children, adults who have lost their jobs… all around a pretty despicable bunch. What bums! People who have worked their whole life and just decide they can up and stop working at 65, or 70, or 75… People who have returned from active military duty and are in need of assistance to compensate for injuries (physical, mental, emotional)… Kids that want to eat lunch and parents who want to feed their family dinner… All in all, I can totally see where these dissenters, these true revolutionaries, are coming from with their outrage against being stolen from on behalf of these kinds of people. Except that I can’t, because they are delusional bastards with the intelligence of a peanut. Come on.

Here’s an interesting stat - over 75% of “entitlement spending,” or government assistance spending for individuals and families, goes towards programs for the elderly, disabled, or working households. Only9% of these assistance dollars go to non-elderly, non-disabled people without jobs.

Okay, so people are angry because they believe the people receiving government assistance are lazy and refuse to work. Is it really half? Are we including babies, children, teenagers, and the elderly in this mix? If not, then are there 95 million (ish) people out there refusing to work? Reality says: no. Here are some actual truth-facts:

It’s just not true that half the population is lazy and refuses to work. It is just not true.

What about the claim that you cannot multiply wealthy by dividing it? I don’t think whoever wrote that has a good understanding of how the economy works. Companies do well (they “prosper”) when the demand for their goods and services is high. Companies die out when demand goes down. As shown above, the majority of the US population belongs to the middle class. Statistics show that by reducing the tax burden on the upper class, the middle class is forced to make up the slack in the form of higher health care costs, higher tuition rates, increased property taxes, etc. The rising cost of services the tax breaks undercut means the middle class – the majority of the population – has less money to spend. Demand, in other words, goes down because people can’t afford it.

As the article linked states, when the middle class is making money, when we have money to spend, the economy flourishes. By creating policies that ensure fair taxation, by passing budgets that properly fund essential services, the financial burden on the majority is lessened and – like magic! – more money is being put into the economy. Demand goes up, companies make money, employees are paid (well, they should be, at least).

This quote from the linked piece pretty much sums it all up: It is not a surprise, therefore, that the last major expansion of the U.S. economy (during the 1990s under President Bill Clinton) occurred shortly after a rise in the marginal tax rates on the top earners (from 31 percent to 39.6 percent). And it is also not a surprise that when marginal tax rates on the wealthy were reduced (from 39.6 percent to 35 percent) under President George W. Bush, economic growth stalled.

So, yes. By taking a little bit more from the wealthiest you really can multiply it – and everyone prospers.  Even the wealthiest! Because as corporate CEOs and investors, they are, after all, the ones benefiting from the booming success of their companies and the companies in which they invest. Bigger gains as a result of small tax increases. Logic and evidence for the win!

Except that the 1% of the population who control the majority of the the wealth in America are the ones convincing the middle class that government assistance programs will basically send them (the middle class) into financial ruin. The wealthiest are the ones feeding the middle class the lies that it’s actually Medicaid that is bleeding America dry, not corporate bail-outs. In reality, it’s the other way around. Here are a few fun facts about what you paid to government assistance programs like SNAP or Medicaid, and what you paid for “corporate welfare” in 2012.

  • The average American tax payer contributed $36 towards SNAP (food stamps) – for the whole year. About 10 cents a day.
  • Just over $6 a year (again from the average tax payer) goes towards “social safety net” programs
  • The federal government spent over $100 billion on direct subsidies and grants for companies. That averages out to $870 per family – lower income families will pay less, higher income families (to a point) will pay more. This number could actually be as high as $502 billion, or $4,400 per family, if you take into account subsidies for fossil fuel companies
  • An average $696 per family ($80 billion spent total) for business incentives
  • $722 per family for interest rate subsidies for banks, $83 billion spent total
  • $870 per family each year for corporate tax breaks/subsidies
  • It goes on…

The author of the linked article, Paul Buchheit, writes, “Overall, American families are paying an annual $6,000 subsidy to corporations that have doubled their profits and cut their taxes in half in ten years while cutting 2.9 million jobs in the U.S. and adding almost as many jobs overseas.”

So, who exactly is taking from others to gain more for themselves?

Those among the 1% receive obscene amounts of tax breaks. Where do you think the tax money comes from, then, to cover what the rich don’t pay in taxes? The middle class. (From you. From me.) The government, by allowing these tax breaks, is essentially taking more money from the middle class citizens in order  to cover for the rich ones. This article from Daily Kos highlights the reasoning behind this. To cover for the obscene tax cuts, taxes aren’t just higher for the rest of us, but government assistance programs lose funding – programs like Medicare and Medicaid, SNAP benefits, and more, which (like the article linked points out) places an even greater financial burden on the rest of us in the middle/lower class. People are outraged over “wealth redistribution” when it comes to government assistance programs, but wealth redistribution in America is just fine when it’s the rich getting wealthier at the expense of everyone else.

You sure as hell can legislate the majority of the poor in America out of poverty. The wealthy have been legislating themselves into ever-growing prosperity for over a decade. Consequently, more and more legislation is being passed to legislate the middle class into the lower class, and the lower class into even more unfathomable depths of despair. “You can’t legislate the poor into prosperity?” Bullshit. It works both ways.

There are some ugly, ugly truths about our country that are hard to face. I’m confronting them more and more, with rulings from the Supreme Court that are made in the name of “religious freedom” but are clearly only about big business, and infographics and memes like this one that are passed around so flippantly, without people really taking the time to understand the implications and realities of what they’re saying.

Here is how I would rephrase those “5 truths” –

1. You can’t (I think they mean “shouldn’t) legislate the poor into prosperity by legislating the wealthy out of prosperity, but you can (and should) pass legislation that lessens the financial burden on the middle and lower classes, thereby creating a thriving economy that benefits all citizens. No one is legislating the wealthy out of prosperity. I hope everyone who is passing around this infographic knows that by “wealthy” they do NOT mean you. Unless you’re in the top 6% million-dollar earners in the country.

2. What one person receives without working for, another person gives without receiving – but it’s the wealthiest among us that are the ones receiving, and the rest of us who are giving to them. The wealthiest among us – and their corporations – are receiving millions upon millions in tax breaks. The money the government loses from these tax breaks means a higher tax burden on the rest of us. We – the middle classes – are the ones giving, but we’re giving to the rich, not the lower class.  And we’re all getting nothing – except screwed – in return.

3. The government cannot give to someone what it did not first take from someone else… Obviously. Simple rules of physics – nothing comes from nothing, everything has to come from somewhere. This is how countries, states, and cities run – taxes. This has been going on for a really, really, really long time. Even Jesus accepted it – “give to Caesar what is Caesar’s,” he said. Jesus demanded both – paying taxes and being charitable. People who claim to be Christian and then bitch about how their tax dollars are spent to help the lower class baffle me. They say, “I should make the decision on my own how to help others. The government shouldn’t force me to do it.” Wouldn’t that be nice? If everyone helped others, just naturally, without being told? I want to go to there. Instead, they complain about having a small pittance of their hard-earned money going towards people-welfare. None of them seem to complain at all about how the majority of their tax dollars – thousands of them – are going toward corporate welfare. Huh. I don’t remember Jesus being as concerned about corporations. Finally, I think it’s important to emphasize that yes, the middle classes are getting screwed over – but it’s not by the government in order to prosper the lower class. It’s by the upper class, who is manipulating the government, to prosper themselves at the expense of the lower 90%. So, maybe our anger should be directed somewhere, um, higher on the totem pole, economically speaking? Maybe less toward the single working mom of 3 not able to make ends meet despite working 2 jobs? Maybe more towards corporate tycoons rewarding themselves with million-dollar bonuses and extravagant “retreats” (vacations) while their companies “struggle” to pay workers a living wage and offer adequate health benefits?

4. You cannot multiply wealth by dividing it, except in all the instances when that actually is not true, when spreading wealth around actually creates more wealth for all.  

5. This one is so stupid I don’t even want to deal with it anymore.

Anyway…

This is an interesting little article about where federal tax dollars go.  It is from 2013, so any 2014 data may have changed. Some highlights:

  • 24% goes to Social Security (which my generation and after will probably not see too much of, so… can we be outraged about that instead?) – $814 billion
  • 22% goes to Medicare, Medicaid, and CHIP (Children’s Health Insurance Program) – $772 billion
  • 19% is spent on defense – military, NSA, etc. – $653 billion
  • 12% is spent on “safety net” programs – EIC (earned income tax credit), Child tax credit, Supplemental Security Income for the elderly, disabled, or unemployed, SNAP benefits, school lunch programs, low-income housing assistance, assistance for neglected/abused children, and more. – $398 billion
  • 8% for veterans programs and federal retirees
  • 6% goes towards paying the interest on our national debt (a total of about $221 billion in 2013)
  • 3% on transportation and infrastructure
  • 2% for science/medical research
  • 1% on education
  • 1% on non-security related international efforts/relations (like humanitarian aid)
  • and a further 3% on “other” – a mishmash of everything else the feds do: Food and Drug administration, environmental protection

Whitehouse.gov provides a page where taxpayers can see how their tax dollars were spent the past tax year.It’s pretty enlightening, and the percentages are similar to the article above, though slightly different.

Another little knowledge nugget – A 2013 article on ThinkProgress.org states that in 2012 the wealthiest earners in America saw their earnings increase by an average of 20%, while the lower 99% saw increases of around 1%. It goes on to say that the top 1% has all but fully recovered from the recession in 2008, while the remaining 99% are still struggling to recap their (it could be argued more devastating) losses. From 2009 to 2012, the top 1% claimed 95% of the income growth in America, growing by 31.4%. The remaining 99% saw an average income increase of 0.4% over those three years.

Anyway (again)… just some thoughts.