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Monday, November 28, 2011  

Redistributing Money is What Budgets Do

On the Tri-State today I saw a car with the popular bumper sticker "Redistribute My Work Ethic." Very clever, and expressive of a current and historically rather exaggerated right-wing opposition to "redistribution of wealth."

The implication of the sticker, and of the whole school of rhetoric it neatly summarizes, is that wealth is being redistributed from the well-off (who work hard) to the poor (who do not) by means of federal programs. But when you think about the federal budget in those terms, you might be surprised at what you find. The biggest "redistribution" that the budget engages in is from people under age 65, regardless of their health or wealth, to people over age 65, regardless of theirs (and importantly, to their doctors). Going down the list, we see that the federal budget redistributes wealth on net from non-defense contractors to defense contractors and from non-farmers to farmers. Through the tax code, it redistributes wealth from renters to homeowners, and especially to the owners of very expensive or multiple homes. It redistributes from the childless to people with children and from people who do not have group health insurance to people who do.

I mention all of these things because these are, for good or ill, very popular redistributive programs (especially among Republican voters and officeholders). If you keep going down from the big-ticket programs and tax subsidies I've mentioned, you'll eventually run into some programs that directly redistribute from the comparatively wealthy to the poor: TANF, food stamps, WIC, Medicaid (this last being, legitimately, a very large program, though very cheap in unit costs). Social Security and Medicare have some progressive distributive impacts, but they are not the purpose of the programs per se, and in any event, as I mentioned, they are very popular among very conservative voters. Apart from Medicaid, poverty programs are quite small and their impact on overall distribution of wealth is not very impressive. But more to the point, even assuming we get rid of all of these things, the federal budget would still be doing a lot of redistribution of wealth. And that's because redistributing wealth is what public budgets do. We settle on common purposes and goods--putting criminals in jail, having national parks, promoting almond exports, whatever--and then we raise tax revenue from other sources to make those things happen.

Perhaps our irritable motorist thinks that feeding people and giving them access to health care is a stupid thing to do--presumably he does--but choosing not to do those things does not mean that the nightmare of redistribution will be over. It's important to have democratic debates over what purposes are important enough to override the rather strong presumption we have in favor of letting everyone keep their money. I, for instance, am not thrilled with the mortgage interest tax deduction, which I help pay for but which I do not benefit from. But for my objection to make any sense, it has to be based on the facts that 1) I think it's bad policy and 2) it happens to be disadvantageous to me. That it's a program of redistribution is itself neither here nor there. If you object to the very notion of redistributing wealth, you object to the notion of the state.

posted by Benjamin Dueholm | 11:28 PM
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