A few weeks ago, I read a post by SunkenThought entitled Disturbed and Perturbed.
I’m not calling out SunkenThought, but I am calling out a mindset. Also, I didn’t want to clog up another person’s comment section with so many words and trigger spam filters.
Where I Disagree
First of all, I think SunkenThought was talking about two things when it comes to people abusing the welfare system and those who expected Trump’s election to somehow improve their own situation.
The votes were still being counted at the time the post was published, but consider an interesting tidbit of information: According to FiveThirtyEight, the average Trump voter had a median income of $72,000 a year. Hillary Clinton’s voters had a median income of $61,000 a year.
Now, the main issue I have is the notion about welfare and how taxpayer money is being wasted on the lazy. While I understand the greater point of that post, I wanted to express a polite disagreement with its tenets.
The image of a “welfare queen” and “lazy bums who take our tax money” is largely overblown. We can credit Ronald Reagan for pushing the former narrative during his 1980 campaign and it has stuck ever since.
My greater point is that welfare should be there … for individuals (in need). The real problems in regards to welfare are the corporate kind and subsidies for the wealthy.
Where Our Taxpayer Dollars Go
According to the Center of Budget and Policy Priorities, “safety-net” spending, which includes: food stamps, unemployment insurance, and assistance for working poor families, only took up about 10% of the 2015 budget, or $362 billion. This assistance helps to keep a good deal of families out of poverty.
Medicare is also a big program, costing about $476 billion a year. An expansion of this important program is what the Affordable Care Act should have been and people who use Medicare need it and love it for the most part.
I would hardly say most people who are helped by those programs are bums. We may know of some people who abuse the system, but many people who are eligible really need the assistance. They take jobs they qualify for and they may be underpaid by corporations that want to increase their bottom lines each year (*cough-cough* McDonald’s *cough-cough* Wal-Mart *cough-cough*).
Now, compare that amount of assistance to the obscene amounts of money the government isn’t getting due to corporate welfare.
For example, remember the case of GE? For years, their tax lawyers found loopholes so that corporation didn’t just avoid paying taxes, but it was owed money by the government in the trillions of dollars.
I would count the Troubled Asset Relief Program (or TARP, as it is best known) as an example of corporate welfare.
I side with people who view the hypocrisy in helping the very companies that created the financial mess while those banks refuse to give (fair) loans to people who needed them. Much of the mess was created by subprime loans promoted to people with lower incomes.
Subsidies for the Rich
There are wealthy citizens who do their best to hide their money and cost the government more with their welfare programs.
For instance, Ryan Cooper looked at six tax breaks wealthy Americans receive. They include tax write-offs for charity and tax breaks for dividends. In all, the tax breaks add up to $133 billion, for the top 1%!
TARP was set up and run by the United States Treasury in response to the 2008 financial crisis caused by numerous financial institutions. The Treasury ran the program by purchasing the troubled assets and equity of failing banks.
By September 2008, number “To Big to Fail” banks and other financial institutions had financial trouble. These institutions included American International Group, Fannie Mae, Freddie Mac, Goldman Sachs, and Lehman Brothers, and Morgan Stanly. Lehman Brothers went bankrupt.
The Cost of TARP
On October 3, 2008, Congress passed the Emergency Economic Stabilization Act. That created TARP, which initially gave the Treasury a $700 billion authorization. That was later reduced to $475 billion by the Dodd-Frank Act.
Here is a breakdown of how the funds were supposed to be spent:
- $245 billion for bank stabilization
- $80 billion for the auto industry
- $68 billion exclusively to stabilize AIG
- $48 billion for foreclosure prevention programs
- $27 billion to programs to increase credit availability
The government reported that it made back much of the money and even turned a profit. By December 2013, the government reported that it made an $11 billion profit for taxpayers (“Troubled”). Also, I’ve read that the government has since made a $71.9 billion profit, much of which came from returns on investments and loans.
However, there may have been hidden costs that totaled in the trillions. According to Nomi Prins*, the bailout cost taxpayers over $14.4 trillion by the end of October 2009. In 2011, John Carney discussed the results of a University of Missouri – Kansas City study, which totaled the commitments of the U.S. government to total $29 trillion.
Other Programs for Corporations
There are at many large programs for corporations that are subsidized by the U.S. government.
They include things like tax havens for companies and CEO’s use loopholes to compensate some of the benefits they get from their companies.
There are subsidies for oil companies.
Pharmaceutical companies garner at least $270 billion a year. Most of the time, these companies save money by taking advantage of the research and development from public institutions. Then they turn around and jack up drug prices.
All told, these government subsidies may cost us about $1.539 trillion a year. That far outstrips the amount of money given to families in need.
Also it all feeds into what I talked about during one of my News Roundups: punching down. When we get people talking about proverbial moochers, we get them to look down at the less fortunate and the less powerful.
At the same time, such an exercise gets us to ignore what is being done to us by people who are for more fortunate and who have far more power. Like Jimmy Dore says, when someone is blaming someone who has less power, they are likely being manipulated by someone who more powerful. That’s what’s going on here and we will need to be mindful of it in the next 4 years because it might be kicked up to 11.
* Nomi Prins wrote It Takes a Pillage: Behind the Bailouts, Bonuses, and Backroom Deals from Washington to Wall Street. The figures listed in the book were current as of October 31, 2009.
Carney, John. “The Size of the Bank Bailout: $29 Trillion.” CNBC. 14 Dec 2011. Web. <http://www.cnbc.com/id/45674390>.
Cooper, Ryan. “Subsidizing the Rich: The Cost to Taxpayers Is in the Billions.” TheWeek.com. 15 Sep 2015. Web. <http://www.thefiscaltimes.com/2015/09/15/Subsidizing-Rich-Cost-Taxpayers-Billions>.
Kocieniewski, David. “G.E.’s Strategies Let It Avoid Taxes Altogether.” The New York Times. 24 Mar 2011. Web. <http://www.nytimes.com/2011/03/25/business/economy/25tax.html>.
Prins, Nomi. “The $700 Billion Bailout Plan’s Fine Print.” Mother Jones. 24 Sept 2008. Web. <http://www.motherjones.com/politics/2008/09/700-billion-bailout-plans-fine-print>.
Prins, Nomi. “The Real Size of the Bailout.” Mother Jones. Feb 2010. Web. <http://www.motherjones.com/politics/2010/01/real-size-bailout-treasury-fed>.
Silver, Nate. “The Mythology Of Trump’s ‘Working Class’ Support.” FiveThirtyEight. 3 May 2016. Web. <http://fivethirtyeight.com/features/the-mythology-of-trumps-working-class-support/>.
“Troubled Asset Relief Program – TARP.” Investopedia. Web. Retrieved 14 Dec 2016. Web. <http://www.investopedia.com/terms/t/troubled-asset-relief-program-tarp.asp>.