The Ends Justify the Means Test

 

Trigger warning: I'm going to do a little agreeing with Joe Manchin here, on the question of what they call means testing, or income- and wealth-based restrictions on who gets government assistance:

Senator Joe Manchin III of West Virginia has a ready retort to fellow Democrats who say shrinking the party’s social safety net bill will mean depriving vulnerable populations of critical resources: Limit access to every program in the ambitious measure to only those Americans who need it most.

Or maybe not so much Manchin as Tim Kaine of Virginia, 

“In the same way that we have higher tax rate on people who make more, I think some programs should phase out on people who make more,” he said.

Still, lawmakers need to be mindful of complexity, Mr. Kaine cautioned, and some programs are more conducive to such limits than others. For example, the push for universal prekindergarten and community college access should be treated as an extension of the public school system, which is open to all comers, Mr. Kaine said.

This is an issue I used to be very hot and heavy on a year or two ago, with the advent of Yangism and the Universal Basic Income that was not actually going to be an income for anybody, and would in my view operate to increase economic inequality: the poorer you were, the more of your lousy $1000 a month you would have to spend on bare necessities, while the rich could invest all of it, for instance putting it in the kids' college fund (poor parents don't have college funds), and directly widening the wealth gap.

But I backed off it last spring, for political reasons, as the last Covid "stimulus" was being devised. Everybody seemed convinced that the promise of more checks not just for the needy but for everybody, especially the swinging suburbanites, had played a vital role in the 2020 election, and even more in the miraculous Democratic victories in the January Senate run-off in Georgia, where candidates Ossoff and Warnock never let up on the $2000 voters would be getting if they won. Then with the advent of the Build Back Better plan debate over extending the expanded-and-fully-funded child tax credit through 2024 or 2025 or 2031, I found myself feeling that the value of the program to those who needed it most was so great that it was worth a little bribery for those who needed it a lot less.

But now I'm having second thoughts, following a poll from Morning Consult for Politico finding that more registered voters than not approved of this year's child tax credit (50% to 38%), but lots more people than not opposed making it permanent anyhow (52% to 35%):

Buried in the cross-tabs data was some suggestive material about why that might be so. First of all, a lot of people had been receiving the credit, solid majorities among all political affiliations (62% of Democrats, 65% of Independents, and 58% of Republicans; 74% of liberals, 52% of moderates, and 59% of conservatives) and also genders (53% of men and 69% of women—the huge gap there has to do with how almost all single parents are women). 

They also asked an interesting question of those who were getting the money: whether it was having a major impact on their financial security or a minor impact or none at all, and overall the respondents were pretty evenly divided, with around 40% calling it major and 40% calling it minor, men and women alike. But in the political categories there were some strong disparities: impact was major for many Democrats (50%) and Republicans (43%) but not Independents (21%); liberals (49%) but not conservatives (34%) or moderates (35%). More predictably, Biden supporters tended to think the impact of the child tax credit was major (54%), Biden opponents didn't (30%).

But few poorer people and richer people both thought it was major (35% and 36% respectively, compared to people at around the median income level ($50K to $100K; 46%). While urban voters found it major (52%), rural voters sort of (42%), and suburban voters not at all (31%). 

I think I'm seeing a pattern here that might track with the numbers on whether the program should be made permanent or not: uniformly better-off suburbanites from the higher-income group saying they appreciated the attention from the American Rescue plan (they approved of it overall), but it was having little or no impact on their security (69%), and there was no reason to keep it going. (In contrast, the 64% of poorer people who said it was a minor impact might have meant they really could have used more.)

What I'm saying is, maybe those suburban voters have been bribed enough already, as far as the child tax credit goes. If the phase-out level was lowered from $150,000 per two-parent household to $100,000, that might gratify old Manchin with a very big slice off the price tag, as well as Kaine and me for general progressiveness, without losing any 2022 votes in particular.

Better this than messing with the child care subsidy, which is already very progressively designed—

Birth Through Five Child Care and Early Learning Entitlement Program. Provides over $90 billion to support high quality child care during the first three years and such sums in the following three years via a new child care and early learning entitlement program to provide high-quality, affordable child care for children ages birth to five, increase wages for the early childhood workforce, and invest in child care quality and supply (including facilities). Caps families’ child care copayments to ensure that no eligible family pays more than 7 percent of their income on child care by creating a sliding scale fee system. Eligible families earning under 75 percent of State Median Income (SMI) would pay nothing toward child care. After a three-year phase in period, families with a parent engaging in an eligible activity would be eligible for, 11 and entitled to, child care assistance through a child care subsidy or grant-funded child care slot. Program ends at year six. 

—or with the federally paid family and medical leave provision, on which Manchin also seems to have designs.

I've been seeing a kind of Yangist pile-on mounted against means testing, under the slogan "all government programs should be universal" and the argument that means testing is very expensive and bureaucratic and humiliating for the beneficiaries, which I think is just a terrible misdirection. 

Universal programs like Social Security and Medicare are "entitlements" run as insurance programs, universal because everybody pays in (in fact they are means-controlled in the payroll tax, where the premium you pay is progressively based on the amount of income you earn, at least up to the cap above which it becomes regressive), and no doubt there should be more of those, including a universal health care system for all ages, of the kind most developed countries have had for years and decades. But there's no reason for programs for alleviating poverty to feed money to people who aren't poor.

If it is very expensive and bureaucratic and humiliating for the beneficiaries, like the dreadful TANF in most states, it's because that's what it's designed for, by people who hate the poor and expect them to "cheat", and they should be better designed. 

A well-designed means test is aimed at the wealthy, to stop them from sucking up benefits. In the case of the child tax credit, it's administered directly through the IRS with information they're supposed to have anyway, so it's not intrusive at all (there's been a big problem in reaching people so poor don't file federal tax returns at all, which may be expensive to fix, but it will be aimed at getting them the money, not like TANF at preventing them from getting it). It's already means tested (don't know if Manchin understands that), and the object should be to make it more so, toward the reduction of general inequality. At least that's my two cents worth,