Why Are Liberals Opposed To Means Testing Social Programs?

Great Debates
1

This is something I have never understood. Here in Canada, every time the conservatives suggest means-testing health care or other social programs, the Liberals have a hissy fit.

In the U.S., the latest social program to gather steam is the drive to provide universal prescription drug coverage to seniors. The difference between the Republican and Democratic proposals seems to be mainly that the Republicans want to provide prescription drugs to poor elderly people, but the Democrats want to give them to ALL elderly people.

Would someone explain to me what Liberal principle requires taxing low and middle income people in order to give free drugs to wealthy old people? Why shouldn’t millionaires pay for their own health care?

I’ve never understood this. If I were king, I would turn all social programs into means-tested support programs, rather than universal entitlements. I guarantee you, Jack Welch doesn’t need his social security check. Nor does he need free prescription drugs. But that young family who was taxed to pay for his drugs might have had a use for that money, you know?

Someone please explain the philosophical basis for universal social programs to me, please.

2

If you rob Peter to pay Paul, you can always count on Paul to support you.

Means testing means fewer recipients. Fewer recipients means fewer votes for the party perceived as having secured the goodies.

Regards,
Shodan

3

If you rob Peter to pay Paul, you can always count on Paul to support you.

Means testing means fewer recipients. Fewer recipients means fewer votes for the party perceived as having secured the goodies.

Regards,
Shodan

4

Its a negotiating position. Liberals would like to move towards a more or less universal benefit, but would be willing to compromise with something that favors those with less to spend. Since the primary source of resistance come from insurance companies and pharmacuetical manufacturers, this is more realistic, since the insurance people cant exploit the penniless, but don’t want to give up the money that flows from those with middle class means.

The trouble comes because so many of the illnesses that afflict the old can instantly turn a middle class elder into a pauper. This is what the elderly fear most, aside from death itself: if one is in pretty decent shape but has a traumatic stroke, one might be required to divest oneself entirely of everything they own.

5

I pretty much agree with your position, Sam. Fancy that, a liberal like me! And ya know what else I’m for? Means-tested Social Security benefits! Gasp! But wait! I paid in all these years, I’m gonna get what I put in! No, in reality you will get many times more than you put in, and then some besides. And don’t you feel just a little digusting demanding your $1000 per month when you’re sitting on half a million in assets with a cushy pension besides? Get over it.

But I do agree with 'luc as regards the middle class and devastating health problems. If we are going to put in means-testing, let it be honest, and let it be generous. My mother gets something like $1200 a month in SS, and the prescriptions the doctors give her amount to half that. That is obscene. Since that is her only income, my mother should be getting $10 prescriptions and $2000 a month in SS. My best friend’s parents, who are worth something in the neighborhood of $15 million, should get absolutely nothing and shut the fuck up about it.

6

Okay, Stoid’s position makes perfect sense to me, and it seems to me to be the logical position for someone who is progressive.

I also understand the ‘tactical’ reason for supporting universality.

But is there a philosophical justification for universality? My understanding of Liberalism is that people who have more should give to those who have less, and that society should help those who are not fortunate enough to either have the luck of inheritance, upbringing, or genetics that others have.

It seems to me that universality flies in the face of this. I can see no justification whatsoever to support the notion that a person making $35,000 a year should be taxed so that an elderly multi-millionaire can have prescription drugs for free.

I got to thinking about this again while reading the discussions about the ‘face’ of the Democratic party, and how it can grab on to the center again.

For instance… Here’s a health care proposal that I think would have a chance of winning over the center: Put a deductible on health care expenses. Liberals argue that people should not be bankrupted by catastrophic health care expenses. That’s a powerful argument. But why go from there to FREE health care for all? Why not have a deductible based on income? If you make under $20,000, your bills are paid for. Make between $20,000 and $30,000, and you pay the first $500 per year. Make between 30K and 40K, and you pay the first $1000. Make 40-50K, and you pay $2000. No one goes bankrupt, and people who can afford more, pay more. To me, that seems progressive.

The other way to do it would be to simply enact a program of catastrophic health care coverage. Leave the system the way it is, but create a program that allows people who suffer undo hardship due to health expenses to apply for government relief.

But such proposals are always killed by Liberals, who cling to the notion that NO ONE should have to pay for medical expenses. In practice, that means that rich people and poor people get the same benefit, which is anti-progressive.

Here in Alberta, the conservatives are waging a continuous war against liberals over private clinics. The conservatives want to allow doctors to open private clinics, which are NOT funded by the government in any way. These allow the rich who can afford it to pay for faster service. This brings more money into the health care system overall, and lowers pressure on the public health care system by taking some of the people off the waiting lists.

But liberals fight against these clinics bitterly, because they violate the principle of universality. That such clinics help poor people seems to not matter.

7

Gonna need some cites here, Sam about the hard hearted perfidious liberals. Part two would be how you compare the cold calculation of these self same liberals with the heart warming generosity displayed by prominent conservatives.

Otherwise, it might seem to the uninitiated that you are indulging in liberal slamming without any real basis. Now, those of us who know you know better, of course, but it could be misunderstood. Mmmmm-yes.

Frankly, it doesnt grind my nuts that much if the rich benefit unfairly from the program. Hell, they benefit unfairly from just about everything else! So what, its a small price to pay to help those who really need it.

8

Means testing requires high implicit marginal rates of taxation in the taper range for the benefit. Interaction between tax rates and the social security system can cause effective tax rates to be very high - in excess of 80% for some people on low incomes in places like Australia. If you are worried about incentives, this is a bit of a downside for means testing.

9

Shodan -

I don’t think this is a very good analogy. In this case you are robbing many Peters to pay many Pauls. The only difference between the two choices is that there will not be as many Pauls with means testing, but in either case there will be many, many more Peters than Pauls. Most Peters will be OK with the idea of helping those truly in need but not with the idea of subidising millionaires.

10

hawthorne, I don’t mind saying… I haven’t a bloody idea what you just said.

Comrade Boris, you should be more concerned about the rich and the well-off benefiting. I am very sorry that I do not have the cites at hand, and my brain is like a sieve when it comes to figures, but The Atlantic Monthly ran a piece quite a long time back (10 years or so) that was quite the education to me, and formed the basis for my belief system about means-testing. It was an in-depth examination of entitlements across the board, and what they cost this country. Contrary to popular (conservative, generally) belief, all the direct welfare taken together doesn’t even begin to touch the greater entitlements given to the rich, the elderly, corporations, etc.

I think I actually saved it somewhere in my “debate box” - I’ll try to find it. Fascinating reading.

stoid

11

Well, yes, among the blessings Mr. Welch walked away with is a couple of thousand a month in Social Security. Truth is, we are facing some pretty ugly choices as regards the elderly: the longer they live, the more expensive thier medical problems become, and they are, almost by definition, much more complicated. Crudely put, we are close to having to choose who gets the doctors time: children or thier great-grandparents.

Nonetheless, I still entirely oppose the Lott-Armey Bill to grind the elderly into dogfood. Don’t like dogs that much.

12

:eek:

Dogs * ** ROCK. ** *

End of discussion.

13

elucidator: Man, can you park your biases for a minute? I’m not sure how you got from my messages that I was portraying liberals as evil and conservatives as saints. I’m asking a simple question:

By what logic or principle of liberalism do you support a system in which poor people are taxed to give benefits to rich people? After all, it happens all over the place: farm subsidies, Social Security, Medicare - those three items alone make up a huge chunk of the government’s budget. Means testing those would wipe hundreds of billions of dollars off the annual budget.

If you don’t like the deductible idea, how about a simple income cut-off? If you have a net worth greater than X, you don’t qualify for benefit Y.

Or, if you want a more complex formula, how about if we simply say that health care expenses should never cost you more than X% of your income, or take away X% of your net worth?

Let’s say we say that this number is 2% of income, and 2% of net worth in a year. A person who makes $20,000 per year should not have to pay more than $400 in health care expenses. The government pays for anything in excess of that. On the other hand, a person who makes $200,000 per year must pay the first $4,000 of his annual expenses. Unless that person also has a net worth of 1 million dollars, in which case he has to pay the first $20,000.

If you want to make it even more progressive, put an income deductible on the front of say, $15,000. People who make less than 15K pay nothing. People who make 30K pay $300. Etc.

This is the exact same logic used to justifisy progressive tax rates. Why not have progressive benefits?

14

Hmmm. Sam Stone makes a proposal that no one disagrees with? Must be because it’s Sunday. :wink:

There are at least two reasons why certain social programs would work better with universal application. First, anytime you have graduated application of benefits, you end up with people who arguably get less than they need because of strict application of whatever dividing lines get set. Universal application avoids invidious discrimination, preventing anyone from feeling like they deserve more and are getting the shaft.

In addition, universal benefit application/eligibility avoids tiered delivery systems. When everyone gets the same benefit, there is no incentive to treat someone differently. When the system is graduated, the potential exists for those using the system getting more or less than those outside the system.

There is also the administrative aspect of a tiered benefit system. With universal application/eligibility, no administration of eligibility is neccessary. When you set limits based on, e.g., income, someone has to administer that tiering (is that a word? it is now… ).

Finally, there is the philosophical aspect. Universal benefits are all about an “enlightened” social structure, where the whole bands together to make sure that all the parts have what they need. It becomes part of a cohesive whole, where society works to remove or at least lessen the differences between the “haves” and the “have-nots”.

Not to mention that, when you have lines, someone has to draw the lines…

15

It was a tad terse. It’s REALLY important, so I’d better explain.

The bottom line is that means testing causes poverty traps.

Taxes change behaviour. Not the amount of tax you pay, rather the marginal tax rate - the tax on the last dollar you make.* Broadly speaking the efficiency cost of a tax depends on the responsiveness of the activity in question and the square of the tax rate.

When you have means testing, this means that a benefit is withdrawn over some range of income. This is known as the taper, phase-out or clawback range. Over that range people effectively face higher marginal tax rates.

Suppose I face a tax rate of 25% and currently receive a means tested benefit and that I am in the clawback income range. Suppose the benefit is reduced by 50c as my income grows by a dollar over that range. When I earn an extra dollar through work or other market activity, I will lose 25c in tax and 50c in benefits: I keep just 25c of the extra dollar and my marginal tax rate is therefore effectively 75%.
This will have some effect on my eagerness to earn extra dollars. How much depends on my labour supply elasticity. In the case of retired people of course, this would affect my saving for retirement.

The trouble with means testing is that by targetting according to need you make it more difficult to get out of being in a situation of need.

In Australia (where we have lots of means testing) it is not uncommon for quite low income families to face effective tax rates of in excess of 80% due to the interaction of the tax and social security systems. These people face strong disincentives against raising themselves out of poverty. If ever we should worry about incentive effects of taxes, it’s got to be here.

This is not to say that means testing shouldn’t be used, just that it is not a simple solution to the problem. All three types of assistance (universal, means tested and negative income tax) have their problems. There’s no policy free lunch either.

*[sub]For those of you with some economics training, marginal tax rates change the slope of the budget line in the leisure/ income (more broadly, non-market/ market) choice. Efficiency costs (“excess burdens”) are identified with substitution effects. This stuff may be found in any Public Economics textbook.[/sub]

16

Having been on several different means-tested social programs, I’ve had to deal with completely arbitrary requirements on the form of verification of my income and resources that are clearly intended to act as barriers. I was required to verify my income and resources monthly when I was on food stamps. I’ve known people who have lost their jobs because of constant phones and letters from the assistance office to employers seeking to verify the same data over and over again, and others who have been forced to choose between getting food stamps or Medicaid or keeping their jobs because the appointment with public assistance is mandatory, is scheduled when they want to have it, and can be rescheduled only if the caseworker wants to reschedule it. Not many employers will let you miss a day each month to see your caseworker.

Keep in mind that it is also impossible to prove a negative. It is very difficult to convince these people that you have no income or that you have no bank account. Needs-tested programs require applicants to prove just that on a regular basis, and often deny benefits for months or even years while the individual tries to perform the impossible.

As soon as you start doing needs-based testing you’ll find people being discriminated against as well as rules being applied by people opposed to welfare in the first place to try to deny as many people as possible.

17

One problem with means testing is that it often becomes a means of discrimination. A way of deciding what poor are worthy vs. unworthy. Turning one’s poverty into a moral issue and judging a person morally for their lack of money.

Another is that it’s degrading as hell for applicant to have to completely spell out how pathetic they are and beg for services.

18

You can’t rob Peter to pay Paul, because if you rob Peter, then he is sore, and we all know that you can’t do business with a sore Peter.

That said, social security is something that everybody pays for and everybody should get. If they don’t want to get what they pay for, there is no law forcing people to apply for the benefit, and you can also send it back or donate it to charity. Why is the burden of proof suddenly thrust on the people who want to apply benefits to everyone? Why shouldn’t the burden of proof be thrust on the side of the argument that wants people to prove their neediness? Why should I be needy to get social security? I f’in paid for it, and I want it. It’s not welfare or charity, it is a pension program I paid into. Fuck conservatives who want to deprive me of it. Fuck 'em!

19

Social Security is indeed a funded mandate, and you have a right to it if you paid in. Unfortunately, it’s actuarily unsound, and has to be fixed. Democratic proposals for fixing it involve taking extra money out of general revenue.

Plus, the Democrats are proposing their own tax cuts, which in fact turn out to be cuts in social security witholding, which means they want to take it from being a funded entitlement to being welfare.

But this has been instructive. You Democrats are willing to let rich people have hundreds of billions of dollars, paid for by the middle and lower classes, so that you can ‘eliminate the poverty trap’, and keep people from having to actually justify their entitlements. At least that’s a position. A bad one, IMO.

20

Hey hey hey, Sam…watch who you paint with that brush, buster.

Hrmph.