Universal Benefits > Means Tested

Confessions of a Recovering Technocrat

One of the big genuine debates inside (bona-fide) Democratic Party circles is whether most public benefits should be means tested, or versus whether they should be universal, or at least nearly so.

Once upon a time, back in the heady-technocratic days of the Obama era, when I had been freshly educated by some of the world’s leading economists, I fell within the means-testing camp. 

After all, if we have a hundred billion dollars to spend on, say, health care, shouldn’t it be funneled to those who have the least means, and need it the most? In utilitarian terms, this would do the most good. And as a matter of equity, we would be prioritizing the right people. 

Part of this was that I rightly assumed that there is a limit, relatively low in global terms, to how much American politics allows for high taxes and redistribution. If that is the case, I assumed, then we should spend as much of that money as possible on those who need it the most. 

I understood that there were other considerations that might constrain this principle. For instance, sometimes we are all better off if we have all guaranteed excellent access to something (like public school, or clean water), so in such cases, it is worth the extra investment. 

But over time, I’ve come to see the matter quite definitely. I now err on the side of universalism, or close to it.

Universal Benefits are Stickier.

My most important mistake was that I misunderstood the politics. 

Yes, Americans are tax-averse and this puts limits on how much people are willing to pay relative to other nations. But what they are willing to pay still varies, and one of the ways to impact this is self-interest. People are more supportive of policies that benefit them or other folks that they sense are “like me.”

I don’t mean to say American elections are perfectly transactional–culture and clan consistently trump self-interest, so to speak. But there is a reason that people like Donald Trump are afraid to admit they want to cut Social Security and Medicare.

And there is a reason food stamps are meager, welfare is rare and stingy, Medicaid is poorly funded, and most people who qualify for housing vouchers don’t get them because we literally aren’t willing to pay for the people who qualify.

You see a related dynamic playing out in Seattle right now–universal benefits are protected from budget cuts; benefits for the poor are on the chopping block. Bruce Harrell’s bosses at the Chamber have let him know that they do not want to see new taxes, even though they are relatively undertaxed compared to everyone else. 

Since they paid for his election, he’s unwilling to do much to cross them. 

So he’s following the only politically feasible path–he’s cutting millions upon millions in spending on the poorest and the most marginalized, like the homeless, the hungry, people with addiction and people experiencing gender-based violence. For the most part, he’ll maintain parks and roads and libraries and other universal benefits. We should be glad he will. 

But the cuts for those who are suffering are egregious–especially since some small tweaks in taxes could fill in most of the budget hole. Whatever the case, it underscores my point. Universal benefits or near universal benefits are stickier because they benefit a majority of voters, whereas programs that do not are always under threat. 

Part of what changed my mind about this was watching how much Republicans leaders panicked about Obamacare and how hard it was going to be to reverse. They did their best to convince their voters that his healthcare plan was some evil communist revolution. But after a few years, almost all of its provisions became popular and are now extremely sticky. It is on its way to becoming politically sacrosanct.

There Is More Money When We Provide Programs to a Broad Swathe of the Electorate.

While passing benefits that broadly touch the population is sometimes hard, particularly if it is ground-breaking (like Obamacare, or witness the conservative backlash to subsidized middle income housing/social housing in Seattle!), such benefits are, as noted above, a lot stickier when in place.

And that means that ultimately, our political economy allows for more taxation when the benefits are broader.

Which makes my original assumption wrong. There isn’t an exact, fixed amount that people are willing to be taxed. Yes, in America it is lower than Denmark. But it also varies–based on people’s sense of whether a program is reasonable and “basic” (which is often tied to whether it benefits them).

In retrospect, this should have been obvious to me–I was surrounded by expert economists for goodness sake! Of course demand or willingness to pay (taxes) for something changes if people get more value from it (free childcare, anyone?). In my defense, it seems like few of those elite economists noticed this incongruity either. 

Given this, I think a key strategy for Democrats should be making public investments that benefit the poor and most of the rest of the population too. These programs are far more likely to survive, which in the end means more redistribution and more taking care of the people who need it the most. 

And a healthy society should be benefiting the rest of the community anyway!

What Comes Next?

Some of the examples of what to pursue are obvious–we should make significant investments to fix our public schools, provide universal healthcare, eldercare, childcare and preschool, and better invest in infrastructure that improves our quality of life (parks, broadband, safe and walkable tree-lined streets, transit, etc.). 

Most relevant in City Politics (outside of schools) is Seattle’s initiative to fund subsidized, middle class housing. This is opposed by the Chamber because it will add a nickel-on-the-dollar tax to incomes over a million bucks (the first million is free!). Big business is probably also concerned that this will be popular and sticky. If we help make housing affordable for nurses and teachers and firefighters–our appetite for public investment might increase. (GASP!)

So, despite a majority of Seattle voters passing an initiative to launch this middle-income housing developer last year, the Chamber’s bought-and-paid-for Seattle City Council is doing its best to kill it. 

To be clear, they aren’t doing this for equity reasons. Yes, some are dressing it up that way (shouldn't taxpayers’ money go to the poor?). But that is blue-washing the fact that their real goal is to prevent the increase in taxes on the richest of the rich. 

I emphasize this only because well-meaning Democrats who embrace means-testing over universalism and aren’t thinking too hard about this housing issue could accidentally be tricked into thinking the council is acting on behalf of equity, when in fact they are choosing the rich over the middle class, not the poor over the middle class.

So, what can you do? First, support I-137, the tax on the richest, and then the ballot provision that will direct that funding to social housing (I think that means voting “yes” and then “1A”). Either way, sign up for the “House Our Neighbors’” newsletter and they’ll keep you posted. 

Next–think bigger about public investment.

Taxpayer’s willingness to fund and keep it might just depend on it.

Postscript

I’d just like to note that there are good non-utilitarian reasons to support universal or near universal benefits. Having a community with more skin in the game and more broad benefits can build a community that comes with shared experience and shared sacrifice and social trust. Living among and around people whose life paths aren’t always under threat likely improves social cohesion, reduces crime, and increases overall willingness to sacrifice for one another–in other words, building virtue in its citizens.