Politics and Government Links

Wall Street: Yep, They Still Own the Place

Fannie, Freddie, and the CRA are Not Responsible for the Financial Crisis

Not quite a 'do-nothing Congress,' but it's close

9 Foods The Government Pays Farmers To Grow

The Army's New Bionic Exoskeleton Makes Soldiers Stronger And Faster

The Supreme Court closes the door to justice. The Supreme Court seems to have lost faith in the American court system.

Defense spending in one chart/table

The most powerful country on the planet, having only just recovered from a self-inflicted financial calamity of epic proportions, is marching towards another self-inflicted financial calamity of epic proportions. 

All signs say Iran is racing toward a nuclear bomb

Taxes and Billionaires

20,000 Leagues Under the State

Over the past few decades, while many standard social benefits have atrophied in real value, those packaged as “tax expenditures”—the formal name in federal budgeting parlance for subsidies provided through the tax code—have flourished, growing rapidly in value and number. These tax expenditures for individuals and families represented 7.4 percent of GDP in 2008, up from 4.2 percent in 1976. (Tax expenditures for business, such as those for the oil and gas industry, made up another 1 percent.) By way of comparison, Social Security amounted to 4.3 percent of GDP in 2008; Medicare and Medicaid, 4.1 percent.

How much do federal programs for the middle class cost?

The Center for Budget and Policy Priorities estimates that in the 2010 budget, social welfare programs for lower-income people (excluding social insurance programs like Social Security and Medicare) came to $496 billion. Medicaid and CHIP make up another $280 billion, for a total of $776 billion. To compare, let’s look at the Tax Policy Center’s data on the cost of expenditures. It’s from 2007, and thus a bit outdated, but it should still be roughly in the ballpark.The total cost of the expenditures, excluding the ones, like the earned income tax credit, that are aimed at lower-income taxpayers, comes to about $601.9 billion a year. If you change that from 2007 to 2010 dollars, it bumps up to $632 billion. So the budget, rightly, is geared more toward helping lower-income people than middle- or upper-income people. But middle- and upper-class people still get a lot out of government programs, even excluding obvious ones like Social Security and Medicare.

I bet you’re getting a subsidy for your health insurance, too

In any case, we do agree that these subsidies — all of them, including the employer-sponsored insurance one — cost the government a lot of money.  The employer-sponsored health insurance tax subsidy costs about $240 billion annually. We bet many people think that per-person public spending on Medicaid is dramatically more than the average worker gets via the employer-sponsored insurance tax subsidy. But guess what? They’re not as different as you might think.

Total Medicaid spending per person is about $6,300. Do you know what the average cost of the employer-sponsored tax subsidy is? You can read it off the graph above as the difference between the right-most and middle columns. It’s about $5,000. And, remember, this was a conservative (low) estimate.* Yes, it is lower than what is spent on behalf of an average Medicaid beneficiary, but not by as much as you might have thought. It’s almost like most workers are on welfare. We bet you never thought of it that way.

* The actual average tax subsidy rate is about 40% (not 37%), making the average dollar amount in subsidy about $5,500 (not $5,000). The difference between this and what is spent on the average Medicaid beneficiary, $6,300, is only $800.