Public Comment

A Note on Social Welfare Programs

By Thomas Lord
Thursday January 24, 2013 - 11:08:00 AM

The context for this note is the public policy debate that we'll be entering in a few scant weeks when the sequestration debate is taken up in connection to the slightly post-poned debt ceiling debate. Here are some progressive talking points you'll soon be meeting (for the good reason that they are sound): 

1) Raising the retirement age is terrible public policy while unemployment is so high for young adults. Asking people to stay on the job longer when there is a shortage of jobs is plainly crazy. (I believe that there are factions of the financial elite who will strongly endorse this argument just as their are factions that would be thrilled to dump employer-provided health insurance entirely. Corporations don't like being in the business of supplying individual pensions when that interferes with their flexibility to change who's on payroll.)

2) Similarly, the flexibility of the younger part of the workforce is obviously tied to the welfare of seniors. Further reducing and delaying benefits directly increases the financial and care giving burden on younger workers, harming their earning and saving potentials at a time when, to cope with the demographic bubble, we need to increase the earning and saving potentials of younger workers. (This part should have a lot of appeal to middle class and working poor younger workers who are currently fretting about what is to become of their baby boomer parents. At least I know that it's on my mind.)

3) This next bit is a little tricky. Put a progressive floor on payroll tax revenues as follows:

Implement generous means testing and a raise on the earnings cap for payroll taxes. If the private sector isn't producing enough employment to cover the programs' costs, but is producing plenty of income, the tax burden needs to go up on higher incomes. If employment improves, the extra burden on high earners can be reduced. In this way, as a matter of policy, we can fairly keep payroll tax revenues stably in proportion to anticipated need for benefits.

The law could actually be written that way: Variable payroll taxes on high incomes could be either or a mix of a variable ceiling on taxable income or progressive but variable rates. The level of the new progressive part of the payroll tax would be varied automatically to hold revenues to some constraint. So there would be an employment-related floor on payroll tax revenues.

(The money party objection to this would be that it implies raising taxes (on high income earners) during contractions in employment so "job creaters durpdy durp" and arguments along those lines. As we saw in the election, though, there is pretty strong popular rejection of that argument. It is in any event a huge retreat from "OMG, the gov't is going bankrupt!")

4) Reducing health care costs is the #1 biggest thing we can do to reduce projected benefits. This is fantastic news because other than the political barriers, it's very easy and painless to make huge progress. The government is paying far too much for prescription drugs, thanks to lobbyists, for example. These are the kinds of hard choices we need to make to bring down cost projections going forward: choices that some of the wealthiest individuals and corporations may not like because where we anticipate excessive governmtent spending, they see themselves as the likely recipients, who will get that spending as windfall revenues and profits. If the government starts paying a fair price for prescription drugs, their profits will be smaller. Well, they can still make a decent profit even if the government is allowed to negotiate on price and now it's very important to move in that direction.

5) The government spends a lot to provide a safety net with the likes of unemployment insurance, housing assistance, foodstamps and WICs support, ... And yet in the pockets of poverty in this country so much of that spending is inefficient because communities are under-served. Access is scarce, for many, to healthy, affordable food. Many of the nation's poorest live in areas from which it is economically hard to escape and where the environment, even the housing in which people live, is unhealthy. These conditions drive up the nation's health care costs and put huge obstacles in the way of kids who should be getting an education and preparing to join the workforce. We should create local citizen commissions to advise local housing authorities and authorize a process for administrating federal tax relief incentives to projects that improve the housing stock and food security in low-income neighborhoods in deep cooperation with the people living in these pockets of poverty, who have the greatest interest in the outcomes. (E.g.: Federal tax incentives to create cooperative groceries, urban farming, brownfield restoration projects, lead paint and other toxic substance removal from residences, installation of modern insulation in regions with cold winters, high-priority small business assistance, and community recreation facilities.)

My intent (failed or not) here is to suggest a positive program that is easy to grok on a naive, intuitive level and that also seems plausibly realistic to a policy implementation wonk. I haven't personally tried to quantify any of it, though (so that's a big weakness, I admit, but then again the alleged quantifications of money-party policy platforms aren't what carries them, I think.).

Thomas Lord blogs a bit on news and politics at and hopes to see some of you there. He'd like to see that website grow organically into something larger than his own tedious voice and so writers with some chops who might want to explore contributing from blogs of their own there are invited to get in touch (write to, for now.) Oh, and readers and commenters ... we'd like them too! A word of caution to commenters used to that other Berkeley side-show of a news site: don't be a jerk.