Social Security Reforms Progressives Will Resist
On January 28, the Congressional Budget Office released “The Budget and Economic Outlook: 2020 to 2030,” and it projected annual trillion-dollar budget deficits for the entire decade. The largest expenditure of the federal government is for social programs, the biggest of which is Social Security. Some progressives in Congress, however, contend that Social Security should not be a part of any effort to balance the budget. But if Congress is ever again to get control over the budget, reform of the social programs must be a part of the solution.
In the Social Security Administration’s Annual Statistical Supplement, 2019, the first block of data, “Table 4.A1 Old-Age and Survivors Insurance, 1937–2018 (in millions of dollars),” is divided into Receipts, Expenditures, and Assets. Let’s focus for the nonce on two columns: “Net payroll tax contributions” on the Receipts side, and “Benefit payments” on the Expenditures side.
The drill here is to sum the two columns, payroll tax receipts and benefits, and then subtract the latter from the former -- for three significant time frames. Our three time frames are delimited by 1937, 1984, 2010, and 2018. Those years are for Social Security’s startup, the year the big payroll tax hikes kicked in, the year that the program went “cash-flow negative” (whereby receipts from the payroll tax hikes weren’t enough to pay benefits), and the last year of the table.
Our time frames are 1937-1983, 1984-2009, and 2010-2018. To simplify, let’s drop off the rightmost digits and express our sums in billions. So, for time frames of 47, 26, and nine years, Social Security produced differences between payroll tax receipts and benefits of, respectively, -$15B, +$1,043B, and -$766B.
If one adds up those three sums one gets +$262B, which figure you’ll also get if you do the routine for 1937-2018. That might seem like a bit of cushion, but the difference between payroll tax receipts and benefits in 2018 was -$129B. If that size shortfall between income and outgo were to continue, then Social Security will have become cash-flow negative over its entire history in early 2021. For those of you who voted for Rep. Alexandria Ocasio-Cortez, that’s next year.
The “burn rate” indicated by the 2010-2018 shortfalls (-$766B) was more than twice as fast as the rate that SS produced surpluses for 1984-2009. It appears that SS will have burned through, i.e. spent to offset the payroll tax shortfalls, an amount equal to the entire $1T surplus generated over 26 years in a bit over 11 years.
However, there are two other sources of tax receipts besides the payroll tax. The larger of these two is “Income from taxation of benefits.” Since 1984, benefits have been subject to the personal income tax. Call it “claw-back,” for this is a type of means testing. (What the SSA giveth, the IRS taketh away.) For 1984-2018, the total revenue from the taxation of benefits was $482B.
The older of the two other sources of tax receipts is “Reimbursements from the general fund of the Treasury,” as the first entry in this column was in 1947. The total for reimbursements for 1984-2018 was $208B.
For 2010-2018, the three sources of tax receipts together are $391B short of being enough to cover total expenditures. So, for the period, SS has been cash-flow negative not just for payroll tax receipts, but for all tax revenue. The $391B shortfall was made up for with interest. When we subtract the $391B shortfall from “Net interest” accrued over the period, we get $461B, which happens to be the total we get if we sum “Net increase during year” over in the Assets section on the right. (Actually, when I summed that column, I got a $2M discrepancy, but hey, close enough for government work.)
In 2018, total expenditures were $853B while total payroll tax receipts were $715B, a difference of $138B. To pay total expenditures with the payroll tax alone, its receipts would need to rise by about 19.3 percent. That would entail a rate hike for the payroll tax of 2.39 points. So instead of being 12.4 percent, the SS portion of the payroll tax rate would be 14.8 percent. And rather than 6.2 percent, workers would have 7.4 percent skimmed right off the top of their wages.
But do we really want to burden wage earners and their employers with a payroll tax rate hike? Perhaps there are better ways to raise revenue. The three sources of tax receipts for 2018 totaled $750B, which makes for a shortfall of $103B. One reform to help close that shortfall gap is the expansion of “means testing” in the taxation of benefits that we’ve had since 1984. We could claw back more of the SS benefits paid to high-income earners. High-income folks who would object to further claw-back of their SS benefits should consider that they are the ones who are already paying to make up for the shortfalls.
Another reform might be the creation of a new surtax levied on all income currently subject to the federal personal income tax. Instituting a new tax is rather progressive, and contains a whiff of Bernie Sanders and other leftists who for years have been advocated taking the cap off the payroll tax. But the rate on the new surtax could be quite low. Look at this chart from the St. Louis Fed and you’ll see that personal income, the target of the surtax, was $18.9T in December. If PI, personal income, were an even $20T, we could cover a $100B shortfall with a tax rate of 0.5 percent.
Democrats, however, would say there is no need for any of this, as interest receipts have been enough to pay the shortfalls that began in 2010. And if interest in a year is not enough to cover any shortfall from the three sources of tax receipts, then SS can tap its so-called Assets, i.e. its $2,797B “trust fund.” And tapping the so-called trust fund is just what happened in 2018. Notice in “Net increase during year” that there was no increase in 2018 and that the value of Assets decreased by $22B, the first such decrease since 1983.
Just where do Democrats think the money to cover shortfalls comes from? Back when SS was in surplus, interest didn’t need to come from anywhere; it was merely a number added onto the trust fund. But now that SS is cash-flow-negative, interest and trust fund transfers can come only from two sources: other taxes, such as the income tax, or loans, i.e. the sale of U.S. Treasury securities. Since Congress has resumed running trillion-dollar deficits, it seems fair to say that SS shortfalls are being made up for with new debt.
This writer urges that SS be put on a strict pay-as-you-go basis. That is, the system should operate on a cash-flow basis, whereby benefits are paid for with tax revenue only. Social Security needs to be put under its own budget, where each year Congress balances income and outgo, i.e. taxes and benefits. If in any year SS spends more than it takes in, then Congress would be required to make up for that shortfall in the next year, either by raising taxes or cutting benefits or both.
Raising the payroll tax rate, clawing back more of the benefits sent to high-income earners, instituting a surtax, or a combination of the three could close the shortfall gaps and thereby make Social Security a self-sustaining system.
NOTE: To verify the numbers above, click on the Excel link in the upper right corner of the first link above and download the spreadsheet, it’s named “4a” and on my system it went in the Downloads folder. If you use Zoho to work with the spreadsheet, click on Browse, then select and open 4a, and then click on View. To sum a column, click inside a cell for your year and drag the plus sign downwards; the sum will appear in the lower right-hand corner. Have fun.
Jon N. Hall of ULTRACON OPINION is a programmer from Kansas City.
Trump’s budget proposal: A new offensive in the social
counterrevolution
12
February 2020
President Donald J. Trump talks to members of
the press [Official White House Photo by Joyce N. Boghosian]
Trump outlines massive cuts
in Medicaid and Medicare in 2021 budget plan
By Kevin Reed
President
Donald Trump with Russell Vought, acting director of the Office of Management
and Budget, in 2019 [Credit: Evan Vucci/AP]
2021
budget categories proposed by the White House over the next decade
There’s now clear evidence that anti-poverty programs like welfare
and Social Security work
Trump’s budget proposal: A new offensive in the social
counterrevolution
12
February 2020
Donald
Trump’s proposed federal budget is an announcement that the American ruling
class is deepening its offensive against the social rights and living
conditions of the US and international working class.
The
proposed cuts would transfer trillions of dollars from the masses of working
people into the hands of the financial aristocracy and affluent upper-middle
class, having devastating consequences for hundreds of millions of workers from
cradle to grave and exposing the utter fraud of Trump’s claim to represent the
“forgotten men and women.”
Trump
proposes to cut $900 billion from Medicaid, $500 billion from Medicare, $24
billion from Social Security and billions more from after school programs for
working class children, programs for homeless students, aid for impoverished
rural schools, programs that subsidize federal student loans, food stamps and
programs for impoverished infants and their mothers. It also places the US
military on a war footing toward “great power” rivals Russia and China,
including a $50 billion plan to modernize the US nuclear arsenal.
Trump’s
proposed cuts to departments such as Education (8 percent), Interior (13.4
percent), Housing and Urban Development (15.2 percent), Health and Human
Services (9 percent) and Environmental Protection (26.5 percent) are steps
toward dismantling social programs and government regulation of corporate
activity.
The
announcement of the White House budget proposal begins the staged process in
which the Democratic Party feigns indignation over the proposed cuts only to
ultimately accede to many of the demands. Under conditions where the vast
majority of Americans are demanding increased spending on social programs,
higher taxes on the rich and a redistribution of wealth, the inevitable outcome
of the bipartisan budget negotiations will be to shift the entire political
establishment further to the right.
This was
previewed by Democratic Speaker of the House Nancy Pelosi who, when asked last
Thursday about Trump’s forthcoming budget, said:
I say to
my members all the time, ‘There is no such thing as eternal animosity. There
are eternal friendships, but you never know on what cause you may come together
with someone you may perceive as your foe right now. Everybody is a possible
ally in whatever comes next.’
This
offer of friendship to Trump came less than 24 hours after the collapse of the
Democratic Party’s impeachment effort, a process in which Pelosi and Democratic
impeachment managers called Trump a “traitor” and stooge of Russia for
withholding $391 million in military aid to the right-wing nationalist
government in Ukraine, which provides money and arms to far-right paramilitary
forces. Speaking the language of McCarthyism, the lead Democratic impeachment
manager Adam Schiff said Trump was obstructing the US from arming Ukraine, an
imperative that ensures “we can fight Russia over there so we don’t have to
fight Russia here.”
The
denunciations of Trump by the Democratic leadership on questions of imperialist
foreign policy and the Democrats’ crusade for internet censorship contrast with
their appeals to bipartisan friendship on social and domestic policy.
From the
day Trump took office, the Democratic Party has facilitated Trump’s attack on
living conditions and democratic rights, first by diverting and suppressing
mass protests that erupted immediately following Trump’s inauguration in
January 2017 and in response to his travel ban and attacks on immigrants, and
then, over the last three years, by voting for major elements of Trump’s
agenda.
In June
2019, the Democrats voted overwhelmingly to support passage of Trump’s record
$750 billion Pentagon budget, which allowed the government to continue to
detain prisoners at Guantanamo Bay and provided $3.6 billion in “back-fill”
funding for Trump’s border wall.
In June
2019, Democrats voted to provide Trump with $4.6 billion to fund Immigration
and Customs Enforcement (ICE) and Customs and Border Protection (CBP) despite
massive opposition to family separation and the detention of immigrant
children, ongoing issues which the Democratic Party and corporate media have
essentially blacked out from national coverage.
These are
only the most egregious examples. Trump’s corporate tax cut, which the proposed
budget will extend, was initially proposed by the Obama White House. Obama
slashed funding for food stamps, Medicare, and programs for impoverished
children and other programs.
Today,
some Democratic presidential candidates have used Trump’s budget proposal as an
opportunity to demand further deficit reduction, verbally opposing his budget
but focusing attacks on Bernie Sanders’ proposals to modestly increase social
spending.
The Washington Post noted yesterday that
after Trump’s budget was leaked in the Wall Street Journal, “Former
vice president Joe Biden has warned Democrats not to embrace an agenda that
calls for unrealistic social policy goals, and Buttigieg declared at a town
hall event in Nashua, N.H. on Sunday that it was time to get serious about the
rising deficit, even though ‘it’s not fashionable in progressive circles to
talk too much about the debt.’”
The
Democratic-aligned corporate media has greeted Trump’s budget with far less
concern than the prospect that Vermont Senator Bernie Sanders will win the
Democratic nomination.
In the
lead-up to yesterday’s New Hampshire primary, television personality Chris
Matthews claimed that socialists will carry out “executions in Central Park,”
while Chuck Todd compared Sanders supporters to Nazi “brown shirts.”
This
language shows that however serious their internal conflicts, both factions of
the ruling class are allied in the existential struggle to protect the wealth
of the financial aristocracy from the growing mood of social opposition from
below. They do not fear Sanders, a longtime Washington insider and loyal
Democratic caucus member. What they fear is the growing leftward movement among
workers, youth and students reflected in the support for Sanders which the
Vermont senator may not be able to control.
All
factions of the ruling class view the mass demonstrations in France, Chile,
Puerto Rico, Sudan and elsewhere as signs of what is to come.
Trump,
having emerged victorious from the impeachment, is preparing for the class
battles ahead by building a fascistic movement and threatening to stay in power
regardless of the outcome of the 2020 elections.
Sections
of the Democratic Party are using a different technique, elevating figures like
Sanders and Democratic Socialists of America (DSA) member Alexandria
Ocasio-Cortez to feed popular illusions that the Democratic Party can be
reformed, that the ruling class can be pressured to enact progressive social
policy and that no independent social struggle is required.
This is a
hopeless utopia. Even if Sanders manages to win the nomination in the face of
widespread corruption in the DNC, his entire program amounts to asking the
network of generals and CEOs who run America to voluntarily part with trillions
of dollars. In explaining the futility of Franklin Roosevelt’s New Deal, Leon
Trotsky wrote that the New Dealers “wind up by appealing to the monopolists not
to forget decency and the principles of democracy. Just how is this better than
prayers for rain?”
The
Socialist Equality Party’s candidates in the 2020 elections—Joseph Kishore for
president and Norissa Santa Cruz for vice president—call on workers and youth
to break with the two parties of American capitalism and harness their immense
social power in the struggle for control of the commanding heights of the world
economy.
The
entire budget proposed by Trump totals $4.8 trillion—far less than the $27
trillion possessed by the world’s 2,170 billionaires. Redistributing the world’s
wealth requires the building of a mass revolutionary movement to confiscate the
wealth of the financial aristocracy and place the world’s productive forces
under the democratic control of the international working class.
Trump outlines massive cuts
in Medicaid and Medicare in 2021 budget plan
By Kevin Reed
President Trump is
planning to release a 2021 budget on Monday that includes deep cuts to
Medicare, Medicaid, Social Security and other mandatory and discretionary
spending while also increasing funding for the military, according to a report
in the Wall Street Journal.
The Journal report, based on
information provided by a senior administration official, said that the $4.8
trillion budget “charts a path for a potential second term” by planning to
raise military spending by 0.3 percent, to $740.5 billion, and lowering
nondefense spending by 5 percent, to $590 billion, for the fiscal year that
begins October 1, 2020. The cuts to social programs would be below the level
Congress and the president agreed to in a two-year budget deal last summer.
Emboldened by his
acquittal in the Senate impeachment trial last Wednesday, Trump is making it
clear that he is going on the offensive to attack the working class by
proposing to cut essential programs and increase the military budget in
preparation for future imperialist wars. The budget also calls for $2 billion
in new funding for the southern US border wall that is a critical element of
the Trump administration’s extreme right-wing racist campaign against
immigrants.
The new White House
budget proposes to cut spending by $4.4 trillion over ten years by reducing
mandatory programs by $2 trillion. This includes $292 billion from safety-net
programs by changing the work requirements to receive Medicaid and food stamps
and $70 billion by restricting access to disability benefits.
The plan to attack
Medicare in particular is an explicit repudiation of Trump’s campaign promises
in 2016 that he would protect this program, which underwrites health care
coverage for nearly all Americans aged 65 and older, and for many disabled
people of all ages. Other reported cuts include a 21 percent reduction to State
Department and foreign aid funding, a 26 percent cut to the Environmental
Protection Agency and a 15 percent cut to the Department of Housing and Urban
Development.
Press reports
suggesting the Pentagon budget will rise only 0.3 percent, after three years of
whopping increases, are likely a political smokescreen by the White House. Much
of the increase in military spending comes in the form of an Overseas
Contingency Operations fund that is not accounted for in the regular budget.
Last year, the Trump administration proposed a similar dodge, but the increases
were ultimately made in the regular Pentagon budget, not the OCO, and dutifully
rubber-stamped by both the Republican-controlled Senate and the
Democratic-controlled House.
Besides direct Pentagon
spending, there will be war-related increases in the Department of Veterans
Affairs (13 percent), the Department of Homeland Security (3 percent) and the
National Nuclear Security Administration (19 percent).
In order to fulfill his
goal of returning American astronauts to the moon by 2024—which was presented
as a major objective in his State of the Union address last Tuesday, President
Trump is also proposing a 12 percent increase in NASA funding next year.
There are two
interconnected and overriding considerations in the 2021 budget plan. Together
these amount to a significant acceleration of the wealth transfer from the
working class to the top one percent that has been underway for the past four
decades.
The first priority is
the maintenance of the $1.5 trillion tax cuts—enacted in 2017 and set to expire
in 2025—for corporations and the wealthy, which reduced government revenues and
drove deficits up to 4.7 percent of GDP, significantly higher than the 2.7
percent average of the past 50 years. The second consideration is the drive to
reduce and eventually eliminate the social programs like Social Security,
Medicare, Medicaid and food stamps, on which the most vulnerable sections of
the working class and poor depend.
The federal deficit is
estimated at $1 trillion for 2020, more than double what the Trump
administration claimed in the budget and tax cut proposals in 2017. The new
plan claims the deficit will be reduced by a total of $4.6 trillion in the next
decade and will be completely eliminated by 2035. During the 2016 election
campaign, Trump promised to completely pay off the federal debt in eight years.
Instead, it has rocketed upwards to $23 trillion, the largest of any country in
the world.
Meanwhile, the plan
assumes a pace of overall economic growth that is significantly higher than
that which is predicted by most economists. The Trump budget plan projects an
economic growth rate of 3.1 percent in the final quarter of fiscal 2020 and 3.0
percent in all of 2021 and the rest of the decade. The US economy has been
growing at a quarterly average rate of approximately 2.2 percent throughout the
Trump presidency. The Congressional Budget Office projects growth rates of
between 1.6 and 1.7 percent over the next ten years.
Trump claimed he would
accelerate US economic growth to four and even five percent, but this is
impossible under capitalism, dominated by financial speculation, wage cutting,
and militarism. The plan also makes the assumption that interest rates will
remain at historic lows for another ten years.
The budget plan will
have little immediate effect, since neither the Democratic-controlled House nor
the Republican-controlled Senate would agree to such massive cuts on the eve of
the elections. Instead, the document represents an assurance by Trump to
corporate America of the general trajectory of his administration, assuming he
remains in office.
As has been the case
throughout the Trump presidency, including during the disastrously unsuccessful
attempt to remove him from office, the Democrats are mouthing opposition while
preparing to collaborate with the White House on the 2021 budget. Several
provisions are designed for the purpose of providing a path for House Democrats
to negotiate with Trump, such as the offer to carve $130 billion from Medicare
prescription drug costs by forcing a drop in prices.
Typical of the
posturing by Democrats was a statement released on Friday by the House Budget
Committee majority that said it was on “high alert” for attempts by the
administration to circumvent Congress. “If the budget is as destructive and
irresponsible as the President’s previous proposals, House Democrats will do
everything in our power to stop the cuts and policies from coming to pass,”
they said.
Immigrants Will Not Fund
Our Retirement
Ask Democrats why they
support open borders, and they will invariably respond: "Because we need
immigrants to pay for our pensions." This argument is a
sham. The data are conclusive: immigration will not save America's
welfare system. It will bleed it dry.
Demographers
and economists have been warning that the aging baby-boomer population presents
a serious challenge to the nation's finances, as the ratio of seniors to
working-age adults – the age-dependency ratio – rises. The reason is
straightforward: Social Security and Medicare are largely financed on a
pay-as-you-go basis, which means that some of the taxes paid by current workers
are transferred to current retirees. If the dependency ratio rises,
the financial burden on the working-age population also increases.
Cassidy's diagnosis of the
problem is correct. America's population is aging, and this is a
problem because America's welfare state is structured like a giant Ponzi
scheme. Although taxpayers contribute to the system throughout their
lives, they never see this money. Instead, they pay for the previous
generation's retirement with assurances that the next generation will pay for
theirs. Welfare is a vampire that requires fresh blood to
survive. This is the root of Cassidy's error.
Cassidy proposes three possible
solutions. First, America could "reduce the level of retirement
benefits significantly – but that would be very unpopular and difficult to
achieve politically."
Second, Cassidy suggests
raising the workforce participation rate, which he notes has fallen from 64.6
to 60.4 percent since 2000. He says this could work temporarily, but
it is just a bandage solution – eventually, people will
retire. True.
After dismissing the above
options, Cassidy settles upon increasing immigration as the best way forward:
The
final option is to welcome more immigrants, particularly younger immigrants, so
that, in the coming decades, they and their descendants will find work and
contribute to the tax base. Almost all economists agree that
immigration raises G.D.P. and stimulates business development by increasing the
supply of workers and entrepreneurs.
Basically, immigrants will
replace the sons and daughters Americans never had, thus perpetuating the
current system indefinitely. This is a bizarre conclusion
to draw for the simple fact that immigrants are a net burden on the welfare
state.
A 2017 study from the National
Academies of Sciences, Engineering, and Medicine found
that although America's immigrant population is (theoretically)
revenue-neutral, most immigrants are actually a drain on the
system. The economic impact of immigrants follows a Pareto
distribution. Commonly known as the 80:20 Rule, this just means that
a hyper-productive few immigrants provide most of the economic gains, while the
majority of immigrants contribute (less than) nothing.
Specifically, half of all
immigrants actually receive more in
government handouts than they pay in taxes, while another third contribute
roughly as much as they receive. Only ~15 percent of immigrants
contribute to the economy in a meaningful way. Cassidy overlooks the
significance of this non-linear data: if immigration as a whole is
revenue-neutral, then increasing the immigration rate will do nothing to save
the welfare system.
When it comes to
immigration, less is more.
Other major studies reach
similar conclusions. For example, a study conducted by Denmark's
Ministry of Finance found that immigrants are a net drain on the nation's
welfare state. In fact, non-E.U. immigrants, and their descendants,
consumed 59 percent of the tax surplus collected from native
Danes. This is not surprising, since some 84 percent of
all welfare recipients in Denmark are immigrants, or
their descendants.
Another major study from
the University
College of London found that immigrants in the U.K. consumed far more in
welfare than they paid in taxes. The study looked at the Labor
government's mass immigration push between 1995 and 2011. The
researchers found that immigrants from the European Economic Area made a small
but positive net contribution to the British economy of £4.4 billion
during the period. However, non-European immigrants (primarily from
South Asia, the Middle East, and Africa) cost the British economy a net £120
billion.
Together, these studies show
that mass immigration undermines domestic welfare systems for the simple fact that
most immigrants take more than they give. Cassidy is clearly wrong.
Finding Narnia
Cassidy's argument is also
based on a false dilemma: his three solutions are not the only options. In
fact, none of them is even the best option.
To "pay for our pensions"
Americans do not need entitlement
reform, a higher workforce participation rate, nor
immigration. America needs economic growth – real, sustained
economic growth, the sort driven by the invention and
adoption of better technology.
Unlike immigration, which
grows the economy in a linear way, technology can cause exponential
growth. Consider the Industrial Revolution: Edmund Cartwright's
power loom increased the productivity of British textile weavers by a multiple
of 40. To grow the economy an equal amount via immigration, Britain
would have needed to import 39 additional weavers for every British
weaver. Clearly, technology is the better option – yet Cassidy
argues in favor of immigration.
If Americans want to save
the welfare state, then they need to restrict immigration and grow the
economy. Period.
Spencer P Morrison, J.D., B.A. is a
writer and independent intellectual with a focus on applied philosophy,
empirical history, and practical economics. He is the author
of Bobbins, Not
Gold and the editor-in-chief of the National
Economics Editorial.
Demonstrators
form a symbolic chain to protest agents a proposed change in the formula for
determining annual Social Security benefits known as “chained CPI,” Tuesday,
July 2, 2013, in Philadelphia. Social Security has continuously been under fire
due to it being underfunded, but research shows it as an effective anti-poverty
measure. (AP Photo/Matt Rourke)
More
Poverty-alleviation programs like food
stamps (SNAP), Social Security, and other “welfare” programs are broadly
effective at reducing poverty, a new study from University of Chicago
researchers found.
The study, performed by researchers Bruce
Meyer and Derek Wu, conducted a more comprehensive analysis than most studies,
because it used administrative data from the programs’ payment records, not
just survey data of recipients from the Census Bureau. The findings shed new
light on the highly politicized debate of welfare programs that are often
characterized as “handouts.”
The effectiveness question is often at
the crux of the dispute, and the study finally answers it in a more complete
way for six major programs: SNAP, Supplemental Security Income (SSI), Temporary
Assistance for Needy Families (TANF), Social Security, housing assistance, and
the Earned Income Tax Credit.
In the past, surveys that looked into
these questions have been somewhat accurate, but have also resulted in
substantial errors, the researchers found. The errors traditionally
underestimated the effectiveness of these programs — and thereby clouded the
debates for policymakers.
“Much of what we know about the effects
of these programs comes from survey data. But there is a lot to learn from the
administrative data,” Wu told Yahoo Finance. “Take single-parent families, for
example. Even though these families are still relatively underserved by the
safety net, the effects of certain programs (like Social Security, SSI, and
Public Assistance) on their poverty rate more than double when we bring in administrative
data.”
Respondents in Census surveys often
significantly under-reported the effects of these programs, failing to count
50% of public assistance dollars, 42% of SNAP dollars, and 16% for SSI. (Census
surveys often neglect asking about some benefits and tax credits, according to
the study.)
The research found that all programs
except for the EITC “sharply” reduces deep poverty, which is defined as
50% below the poverty line, which is an income of $12,140
for an individual and $20,780 for a family of three.
The EITC has a bigger impact for families
around 150% of the poverty line, an income level often described as “working
poor.” The researchers called the tax credit, along with SNAP, the “most
effective” of the means-tested programs.
For the elderly, Wu said the research
found that Social Security benefits “single-handedly slashes poverty by 75%.”
Social Security’s overall effect on all poverty is also enormous,
responsible for by far the largest poverty reduction among all these programs,
the study said.
When it comes to alleviating deep
poverty, Wu said, “many of the means-tested transfers (like SSI, SNAP, and
housing assistance) play a substantially larger role than Social Security,
which pays out more for those who put more in.
Asked what he would emphasize for
politicians and policymakers, given what the study has found, Wu pointed to the
study’s bottom line.
“Many of these government programs do
have pronounced effects on poverty, especially if you look at groups that the
programs are designed to target,” said Wu.
—
Ethan
Wolff-Mann is a writer at Yahoo
Finance. Follow him on Twitter @ewolffmann.
Confidential tip line: FinanceTips[at]oath[.com].
There’s now clear evidence that anti-poverty programs like welfare
and Social Security work
Senior Writer
Yahoo FinanceMay 11, 2018
No comments:
Post a Comment