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What's the Most Expensive Federal Government Social Program? (It's Not What You Think)

120601-submergedstatePop quiz: What is the most expensive federal government social program? (Hint: It is not what you think).

If you think about this question within the context of the recently proposed cuts in Congress, the answer would appear to be fairly obvious right?  Like me, some of you may have guessed the Supplemental Nutrition Assistance Program (SNAP, formerly food stamps), or maybe you went with the Earned Income Tax Credit (EITC), or the Section 8 choice voucher program (low-income housing), or unemployment benefits, or TANF. As you have probably inferred from my “hint,” however, if you guessed these or any other programs that benefit poor, hungry, and out of work people, you would be absolutely wrong. Not even close actually. 

So what IS the most expensive federal government social program? It's the retirement benefits exemption. Surprised? So was I, but maybe we shouldn’t be.

In her interesting book “The Submerged State: How Invisible Government Policies Undermine American Democracy,” Cornell Professor Suzanne Mettler highlights our government's three most expensive social tax expenditures: the retirement benefits exemption, the health insurance exemption, and the home mortgage interest deduction program. She states, “Neither the costs of food stamps, the most utilized program for low-income people, nor of unemployment insurance, which provides economic security for Americans of all income levels, amounts to as much as half the value of even the least expensive of these programs (i.e. home mortgage interest deduction).”

So, when it comes time to balance budgets and cut the deficit, how come we never hear Congress clamoring to make cuts to programs like these? To answer that question, perhaps we need to add one more question to our pop quiz: Who benefits the most from social tax expenditures such as the retirement benefit exemption and the home mortgage deduction? You probably figured it out by now: the more affluent.

According to Mettler, the retirement benefit exemption and the home mortgage deduction program are the most skewed with, over 55 percent and 69 percent, respectively, going to Americans with household incomes over $100,000.00. In general, these kinds of social tax expenditures exacerbate inequality, with the notable exception of the Earned Income Tax Credit (EITC).

Attempting to balance the budget and cut our deficit on the backs of poor and hungry folks by targeting programs such as SNAP is not only the wrong thing to do morally, but it simply won’t work.  It is up to us to make sure it doesn’t happen.

Matt-grossMatt Gross is regional organizer at Bread for the World.

 

 

 

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Comments

thanks for bringing this to light Matt.

This is preposterous. It follows the reasoning that my money is "unrealized income" for the government. Just because it has the power to impose taxes but doesn't, doesn't mean it is favoring a certain tax bracket. These are not unfair "programs" in the least...they are simply benefits that all can aspire to. If we got rid of ALL the tax loopholes and EVERYONE paid 10% of income, we'd have fair taxation and less reason for class envy.

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