Welfare Gap

            With a new Republican majority, those of us who care about the poor are steeling for a new round of cuts to benefits.
To his credit, Trump didn’t run a campaign that heavily focused on negative attitudes about the poor per se. He wasn’t repeating Romney’s 47% nonsense generally. But that isn’t to say that Trump’s public statements and actions over time regarding welfare and aid to the poor have been particularly impressive. Trump claimed that his apparent racism against black tenants was due to wanting to turn away welfare recipients, that food stamps should be temporary and that food stamp fraud is a serious problem, that welfare-to-work should be applied to seventy-six other programs, and that public assistance should be restricted with people being forced to go through “hoops”. Much of this was in 2000 and 2011, but it’s unquestionable that Trump, for all his faux-populism, is not going to be protecting programs that aid the poor.
Thus far, the anti-poor and anti-welfare rhetoric isn’t coming too loudly from the Republicans. But it’s not far in coming. Virginia Republicans, for example, are trying to further restrict Temporary Aid for Needy Families, the core welfare program. Paul Ryan’s consistent Randian rhetoric and his opposition to Medicaid is quite clear.
            How can these people pretend that they’re not just openly attacking the poor with their rhetoric and plans?
Well, Trump doesn’t much care (and apparently much of his poor fanbase don’t care when they are insulted to their face), but the traditional conservative answer is basically that we should let the private sector do it instead.
The idea is that we can spur not just growth but also charity more effectively if we just rely on non-governmental organizations, faith-based institutions, charities, and business. We’ll spur growth by cutting bloated government and taxes, we’ll get people off of welfare and reduce their dependency, and we’ll see people be more generous when they aren’t forced to give.
We’ve already covered why the idea that cutting welfare will somehow help the poor or reduce dependency is nonsense. In particular, the argument that we should cut welfare or make it harder to get is the argument that the poor would be better off without even the option of welfare benefits (that no one is forcing them to get). That’s patently and facially absurd, and yet it’s apparently made seriously.
Similarly, the idea that cutting benefits for the poor will help the economy is the worst kind of voodoo economics. The idea that you can cut taxes and help the economy indefinitely is itself voodoo economics: trickle-down economics don’t work. If the government were just taking taxes and burning it in a giant trash fire, then yes, taxation would likely be less efficient than the alternative. But it’s not like the private economy spends everything perfectly: we spend money on unhealthy food, the work of con artists and flim-flammers, and on the psychic warfare of advertising.
There’s very little difference, economically, between the government cutting your taxes by $200 and the government giving you $200. But the tax burden of the poor and middle-class is already so low that government programs can be very beneficial for them, especially when considering that the government can provide some services with an economy of scale. From the perspective of the whole economy, meanwhile, if we tax the rich and give it to the poor, that same dollar will do a lot more. When you give $1 to a billionaire, they’re likely to just invest that extra dollar into increasingly high-risk instruments for higher and higher gain, for the same reason that someone who gets an $800 bonus might be willing to gamble it away. But a person who has only $500 or $2000 in the bank who gets an extra dollar is likely to spend that extra dollar on maintenance on their home, educational supplies for their children, stocking up on food, or even just save it in a bank for a rainy day (and thus guarantee that it’s actually lent to, say, small businesses).
It’s entirely possible for more and more money to go into the hands of a smaller and smaller group. That’s been the story of the last forty-five years of American economics, in essence. This is why Asher Edelman, the model for Gordon Gekko, endorsed Bernie Sanders in 2016: he knew, as an economist and investor, that Sanders’ policies would actually resolve the money velocity problem. To quote him:
“When you have the top 1% getting money, they spend 5-10% of what they earn. When you have the lower end of the economy getting money, they spend 100-110% of what they earn. As you’ve had a transfer of wealth to the top and a transfer of income to the top, you have a shrinking consumer base basically, and you have a shrinking velocity of money. Bernie is the only person out there who I think is talking at all about both fiscal stimulation and banking rules that will get the banks to begin to generate lending again as opposed to speculation”.
But it’s that last argument, that people would magically bridge the gap between what is needed for the poor and what is currently offered if we cut welfare, is the one that is most worthy to discuss, because it’s the most toxic and yet the one that has an intuitive assumption that makes sense if you just think like a spoiled brat.
On its face, it makes no sense, after all. How does cutting services help the poor?
Let’s say, for the sake of argument, that the gap between the total amount of resources that need to be provided to the poor right now and the amount that is provided is 50%. So we’re halfway to getting the poor to what they need to be able to stabilize themselves, stop going into credit card debt, and be able to climb up the ladder by saving money, sending their children to school, investing, and taking risks like taking some continued professional development courses or starting businesses. (This is probably low by a good margin, but let’s just assume that it is). Let’s further assume that government provides 30% of that 50%.
How would cutting state services do anything but reduce the amount of what we need to get to the poor to 20%?
Conservatives can’t just say that those who had their total tax burden cut by these reforms would take some of that windfall and give it to charity in some form, whether it be through more time volunteering or more donations of cash or goods. They have to say that they would not only give all of that extra amount, and more.
If they were wrong, then what would happen is that those forces, from social workers to charities to churches, that deal with poverty would be even more slammed than ever. Without public housing, you would see even more competition for space at homeless shelters (with both Los Angeles and New York not having enough even today). Without food stamps, you’d see that food banks and other private food distribution systems would be even more slammed.
Search anywhere to see if anyone explains this logic. I’ve never seen it. They just assert it by holy writ, that people would give more if they weren’t forced to.
There’s only one piece of logic that defends this idea: the concept that people would give more to private charities than they do to government because they wouldn’t resent having to give to the government so much.
There’s some logic to that. It can be annoying to feel obligated to pay into something. Sometimes, we pay in more if we feel like it’s really our choice.
But can anyone really pretend that that would be enough to bridge the gap from the loss of TANF, Medicaid, food stamps and other resources?
After all, even if we just think about personal motivation to give as the only factor, not everyone would give more if they didn’t have to give. Some people would give just as much and don’t mind being taxed to help their fellow man. A good portion of the population, in fact, doesn’t mind government giving aid to the poor (and we’ll return to that arbitrary distinction between welfare and giving to the poor later). Similarly, some people won’t give at all without government asking them to. Some people may actually give more if government asks: some people may see that the problem is bigger than they imagine it is if an official government policy indicates that they should.
But to pretend that the only thing that stops resources from getting to the poor is people clamming up because they’re being taxed, and a magical overflow of generosity would instantly appear if welfare programs disappeared, is so ludicrous as to be beyond the imagination’s ability to easily scoff at.
For one, ignorance is a major barrier. People are just unaware of how unequal America is or how serious poverty is. How can you expect people to give more to the poor if they don’t think the poor need it?
That lack of information about the actual needs of the poor isn’t an accident either. It’s caused by the same institutions and factors that create anti-welfare attitudes in the first place. Does anyone really honestly believe that FOX would begin honestly reporting on the poor and not pimping their idea of meritocracy? Without welfare, does anyone really think that suddenly the rich and poor would live closer together? It used to be that the children of the rich would get summer jobs and at least understand some of what it’s like to work at an “honest” profession; does anyone really believe that contact between the children of the rich and the poor would increase in a post-welfare world, that the rich would suddenly send their children back to fast food or to the Jiffy Lube instead of cushy internships?
One of the biggest predictors of an opposition to welfare programs is one’s degree of racial resentment or mistrust or hatred or anger. Why would people who no longer saw their paychecks taxed for Medicaid and TANF suddenly begin to empathize with a black poor that they previously mistrusted and thought were mooches who weren’t going to get off their behinds and work?
The Republican Party’s entire mythos is based on the idea that we live in a meritocracy, that those who are the winners at present won that honestly and those who are losers are just slackers, and that the only real barriers that can possibly exist are against the winners. That’s why conservatives can really believe that it is the Christian straight white male on the cusp of persecution. Why would that idea evaporate, and an outpouring of sympathy for the “bums” suddenly begin, if welfare were cut?
Anyone who’s poor or been unemployed can testify to the insults, to the idea that one is a mooch or a loser if one isn’t rich, that your opinion is worth less if you don’t own a business or drive a Bugatti. Would those ideas evaporate without welfare? Or is welfare just an excuse to maintain those ideas and pretend that the poor really are lazy bums?
Worse of all, we can empirically test all of this. Welfare has been attacked and cut for decades. We saw “welfare reform” including welfare-to-work. Welfare-to-work in particular is one of the best tests of the theory that people would give if they weren’t forced to, because it made welfare contingent on people doing something to indicate that they weren’t lazy mooches, so it should have made welfare recipients more humanized.
And yet inequality grew and various indicators of poverty and economic disadvantage either stagnated or worsened. Welfare reform failed.
            Unsurprisingly, the reality that is going to occur is simple. The rich are not going to suddenly discover a charitable spirit and become clued into what the poor actually need. Trump’s America will be disastrous for the poor. The trillions in tax cuts that he wants to pursue will require cuts, and since he won’t put the military on the table nor the politically-popular and entrenched Social Security or Medicare, every single other aspect of aid to the poor will be reduced. Meanwhile, the money velocity problem is going to worsen. Many believe that we are facing yet another Great Recession soon, because while in theory a “boom” is going on right now, it’s surely not reaching the poor.
Unmasking the lie that cutting welfare will somehow get more resources to the poor will be a big part of the effort to maintain the small safety net that remains.

This article was written by Frederic Christie, a writer for dusk magazine. 

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About Fred B-C (28 Articles)
I'm a freelance hope warrior. While I am still figuring out exactly what that entails, I write novels and short stories, write for video games, design board games, do inspirational speaking and life coaching, and generally try to make the world just a little bit more pleasant. E-mails at frchristie@ucdavis.edu are always appreciated! (Yes, even trolling ones).

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