The Wall Street Journal has a poorly done front-page story this morning trying to make the case that the U.S. has become a welfare state.
As evidence, the paper points to the percentage of households where a member receives some kind of government benefits. That number has jumped from 30 percent to 44 percent over the last quarter of a century. Wow, nearly half of the country is on the dole!
That’s the impression the Journal would like you to get. You can tell that by the holes in the story.
For one, we’re not told how that 44 percent breaks down. How many are on Social Security? How many are on food stamps or Medicaid? How many get veterans benefits (that’s not even mentioned in the piece somehow)? Do, say, subsidized Stafford college loans count as government bennies? If so then your Audit Seattle bureau is a dirty freeloader! But we’re not told any of this. Those distinctions matter.
Second, the Journal fixes most of the blame on the expansion of government programs. It mentions the aging population briefly, but doesn’t quantify it. There’s been about a 20 percent to 25 percent rise in the percentage of retirement age people over the last quarter century. Glaringly, it doesn’t mention income inequality at all. The people at the bottom of society have fallen behind during that time frame while most (58 percent) of the income gains of the last thirty years have gone to the richest 1 percent.
As of the 2004 Census, most of the country—the bottom 60 percent—earned five percent less than it did twenty-five years earlier, according to the Times.
So how many get Social Security, which, after all, is an insurance program funded by years of regressive (or at least non-progressive) tax payments? The Census says 29 percent. That’s funded specifically by the payroll tax. Another five percent get veterans or unemployment benefits.
How many get means-tested welfare payments like school lunches, Medicaid, and food stamps? Twenty-four percent. That should have been broken out.
Third, we don’t find out how much money these benefits are worth. How much does the average household on benefits receive? That’s a pretty big hole in a story about how this causes structural deficits.
And what percentage of individuals receive benefits? The household number makes this look larger than it really is—though I’ll point out that that number is what the government itself uses. If your kid gets free lunch, then your household gets counted even though you and your husband didn’t get any yourselves. If your grandpa lives with you, you get lassoed in with the Social Security households.
Most problematically, though, the story doesn’t mention the fact that all these benefits were in place in 2008, but the deficit in that first year of recession was hardly in the trillions. It was $438 billion, or 2.9 percent of GDP. A year earlier, the deficit was just $161 billion, or 1.2 percent of GDP. All these programs were in place then (though unemployment benefits hadn’t then been temporarily extended).
In other words, the recession is to blame for most of the deficit. And if you think the economic misery of the last three years has been bad, try to imagine what it would have looked like without these programs. You’d have had rioting in the streets.
The spread of entitlements is a real story—a huge one. But context is critical.
It does not help the conservative cause to allow their critics to say that conservatives believe any money (other than industry subsidies-- unless you're from Cato) that government pays domestically is somehow considered "welfare". It may, however, get nominal conservatives into office on a wave of astroturf populism in the short term.
What could have been a great Journal story about government largesse is ruined by a lack of basic rigor.
#1 Posted by MM, CJR on Thu 16 Sep 2010 at 11:01 AM
In other words, the recession is to blame for most of the deficit.
Huh .. when did you all change your story? I thought the wars in Iraq and Afghanisatan were to blame for most of the debt? I thought the Bush tax cuts were responsible for most of the debt?
You guys got to do a better job I staying on message! Wasn’t that the whole purpose of Jounrolist in the first place?
#2 Posted by Mike H, CJR on Thu 16 Sep 2010 at 11:35 AM
Mikey, I thought you were better than this. Tax cuts, unfunded industry friendly benefits, and the wars were responsible for turning the 200 billionish surplus in 2000 into a 438 billion dollar deficit in 2008. The recession following the dot com crash and the war on terror also depressed revenues.
http://www.nytimes.com/interactive/2009/06/09/business/economy/20090610-leonhardt-graphic.html
But yeah, the latest crash which disrupted the fiscal health of the whole financial system caused massive drops in government revenue and huge increases in demand for government services. Deficits are entirely natural when you have collapses in the private sector from which government revenue is derived.
But yeah, ha ha. Slipped another reference to the Journolist conspiracy. What's next, gonna' make a witty segueway to Kenya?
#3 Posted by Thimbles, CJR on Thu 16 Sep 2010 at 12:37 PM
There is a certain kind of liberal-left journalism that objects to usages like 'socialism', 'the welfare state', etc. - but whose framing is like Seinfeld's 'not that there's anything wrong with that . . . ' Ryan doesn't exactly explain what is wrong with characterizing the US as a welfare state. He doesn't explain why these income-transfer programs, administered by the political sector, should not be considered the works of a welfare state, and come out in favor of it, and of plain speaking. He just names the benefits, and then excludes them from being part of any such definition. Why should Stafford loans and free lunches and Social Security not be considered part of a welfare state?
There is an argument to be made per the WSJ article that what we're talking about isn't 'socialism' of the Scandinavian variety - income transfers rather than direct state ownership - although the GM case and other bailouts suggest that the Left seeks socialism's state power without calling it 'socialism'. No, it is easily forgotten that the European state was large and powerful before Karl Marx ever entered the British library. The word is 'dirigism' - no theories about surplus value or the laws of History, just a big, big state because some people like exercising big, big power in a paternalistic way. CJR, as usual, just recasts criticism of the dirigist state as ideological animus against a fictive 'socialism'. Louis XIV was a 'big government' man, too.
CJR's editors should have the courage of their secret hearts and forthrightly endorse journalism that confirms their urban-Left view of American politics as 'reality'. Or else work harder to get slots that open up at The Nation, Mother Jones, The American Prospect, or other way-stations on the career path. We already have one Media Matters. Who needs another one, especially one which pretends to be disinterested and non-partisan?
#4 Posted by Mark Richard, CJR on Sat 18 Sep 2010 at 08:53 PM