The Budget - Whose Benefits?

August 20, 2012
Posted by Jay Livingston

I mentioned Niall Ferguson in the previous post.  I had not realized that his anti-Obama essay  (“Hit the Road, Barack”)  was Newsweek’s cover story and was stirring up much dust.

No wonder. 
Welcome to Obama’s America: nearly half the population is not represented on taxable return – almost exactly the same proportion that lives in a household where at least one member receives some type of government benefit. We are becoming a 50-50 nation – half of us paying the taxes, the other half receiving the benefits.
The first part of the first sentence is technically wrong – even those who do not pay taxes and who get the EITC file a return.  And it is true that 46% of earners pay no federal income tax.  That doesn’t mean they pay no taxes – there are payroll taxes and sales taxes – just no income tax.

It’s the second sentence, the applause line, that’s misleading.  Is all that tax money really going to the less wealthy half of the people?  The federal budget shows where the tax money actually goes.  Here’s the New York Times chart.  I have outlined in red the categories that benefit mostly those who pay no income tax.

The Times chose very faint colors that make the writing hard to see.  The square in the lower middle,  “Income Security,” includes unemployment insurance, retirement benefits for civilian and military, food stamps, TANF, and several programs.  The squares in the upper right are Medicaid and CHIP.
(Go to the Times, here, for an interactive version of the chart.  You can also click on“Hide Mandatory Spending” to view the parts of the budget that can actually be cut.)

Niall Ferguson is an intelligent and well-informed man, a Harvard professor, and he has lived in the US for several years now.   You would think that he’d know that most of the federal budget goes to Social Security, Medicare, and the Pentagon – programs that benefit all Americans (including Paul Ryan’s mother) and do not “benefit mostly those who pay no income tax.”  Anybody who reads a newspaper or listens to the news a couple of times a month must know this.

I can understand why Ferguson would write something like this – he obviously intended to write  a campaign screed against Obama, not a thoughtful, accurate news article.  To that end, he echoes the Romney ad, the one that says Obama
Quietly announced a plan to gut welfare reform by dropping work requirements. Under Obama’s plan, you wouldn’t have to work. You wouldn’t have to train for a job. They just send you your welfare check.
Not true, of course, but that’s not the point.  The point is that YOU (you hardworking, taxpaying good person) pay tax money that Obama gives to THEM (the lazy recipients of government benefits, the bad people). Neither the ad nor Ferguson says what color YOU and THEM are, but we know, don’t we?  It goes without saying.

There are many more errors and contradictions in Ferguson’s piece; that's to be expected.  But what is Newsweek’s excuse for not fact-checking it?

(For fact-checks of the Ferguson article, see, for example, Business Insider, The Atlantic, and Slate .  Other critiques should not be hard to find, Noah Smith’s, here,  for one.)


Simply Aaron said...

I don't know which bothers me more; That despite the proliferation of fact checking sources on the internet, and devices that allow us to to access them at any time, that most political arguments seem to fall apart (or at least severely weaken) in just five minutes of review of the raw data. Or, that these same points of view/articles of faith will carry on despite their falsehood.

What characteristic of human nature would you think drives this? Most people, most of the time, seem to be evolutionarily preconditioned to take the intellectually easy way out by pounding every puzzle piece to fit our own point of view. This drives data hungry empiricists like me to imagine banging my head on the computer screen when this behavior comes up in areas that we should really be thinking critically, like domestic policy.

Anonymous said...

"programs that benefit all Americans (including Paul Ryan’s mother) and do not “benefit mostly those who pay no income tax.” Anybody who reads a newspaper or listens to the news a couple of times a month must know this."

you probably did not like the choice of words instead of the idea imparted, or you heard what you wanted to hear, i do not know or care, but that logic your using is impaired on this as is dollars and percentages were divided up everybody does not get (lets say for example 10%) the same amount. now we all get protected by the armed forces, yet the president and members of congress get more than the 10% alloted to them. we all get tax breaks 10% but the ones over the (lets say) million dollar mark get reduced rates of less than 30%-60% of any income above that 1 million dollar mark (great for warren buffet) where every one up to 1 million (not so great for you and me)
dollars pays on 100% of their income earned.

the poor, get charged 10% but get a tax break if they make less than (lets say)$17,000 they get redeemed (lets say)25%-40% of the income they paid in on. top it off if they made substantially less or nothing they even got paid by the government if they filed claims for it, free money so that a significant portion of their income came from yours, mine, and warren buffet wallets, and had we not had to pay for these poor the tax rate for every one would be at (lets say) 5% to 9% in decreased cost.

calling these payments made to the poor as mandatory spending when infact they are not any more than firing/laying off workers in government who only have enough work for 3.8% of their day or 2 weeks out of a year (please don't do the actual math, it's just for demonstration)and just employing them for when that work is needed to be done(like census workers)or contracting out to 1 person who will do all the work of those people all year long