Mark Schmitt

The Theory of the Moocher Class

[Cross-posted from The Roosevelt Institute's Next New Deal blog] 

As David Brooks points out, Mitt Romney's remarks describing 47% of the population as, in effect, moochers who would vote for Obama because they got government benefits were not “off the cuff,” as he described them today. There is a carefully developed theory behind his words, which has seen expression in previous Romney speeches, such as one last December in which he described Obama's vision as an “entitlement society” in which “everyone receives the same rewards,” but in which “we'll all be poor.” The lab where this theory that we're headed toward a radical egalitarian state is being developed is the American Enterprise Institute, the oldest of the conservative think tanks and one that, much like Romney, has forsaken the traditional business-minded conservatism of, say, the first President Bush, for hard conservatism in which everything is a grand showdown of incompatible worldviews. The two recent books by the current AEI president, Arthur Brooks (The Battle and The Road to Freedom) embody this apocalyptic approach, as does a recent essay-with-graphs by longtime AEI scholar, and accomplished demographer Nicholas Eberstadt, called “A Nation of Takers.”

 

AEI invited me to participate on a panel with Eberstadt a few months ago, when the essay was just a series of unpublished PowerPoint slides. I welcomed the invitation, but had to cancel due to a conflict. However, I wrote up notes at the time, and what follows is adapted from those notes.

“A Nation of Takers” shows in some detail the expansion of government benefits since the 1960s and the share of the population they reach. The data is not wrong, but it's selective, and the story that Eberstadt has wrapped around them – that receipt of benefits makes people “dependents,” that people are becoming “chiselers,” choosing to maximize benefits, that the expansion of entitlements was a political effort by the left that slowly overcame “resistance” from real Americans is highly tendentious. The reality is that people who receive benefits are no more or less “dependent” than corporations that get tax breaks or legal protections, that the expanding costs of major entitlements are about rising health care costs and, to a lesser extent, the demographics of an aging nation than more people becoming “takers,” and that the expansion of some benefits to the lower rungs of the middle class was a bipartisan project in which conservatives should take pride.

 There is a story implied in the very word, “takers,” which is reminiscent of former Senator Phil Gramm's oft-repeated metaphor of a wagon: there are “people riding in the wagon,” he would say, and “people pulling the wagon,” and the people riding need to get out and pull. But while you can't pull a wagon and ride in it at the same time, you can certainly be a taker and a giver at the same time, or at different times in life. For example, Eberstadt's charts show that the government benefit that grew fastest in recent years, not surprisingly in a recession, is Unemployment Insurance. Everyone who receives benefits from Unemployment Insurance, without exception, has worked – usually full time and steadily for at least a year – and paid into the system, through their employers. And they will (they desperately hope) work again, and pay even more. Some people might end up receiving more, over their long working lives, while others might pay in while having the good fortune never to be unemployed. But that's the nature of insurance. Most of us, other than the permanently disabled, are givers and takers to government, because that's what it is to be part of a community or a nation.

 A look at the individual programs behind all of these charts indicates that the big story is the extension of the social safety net from the very, very poor to the lower rungs of the working poor, particularly through expansion of Medicaid and tax credits for working families. With bipartisan support, these innovations have fundamentally changed the social safety net that both conservatives like Charles Murray and Lawrence Mead and liberals like David Ellwood described in different ways two decades ago: A system in which it really did make more sense for poor parents not to work than to give up the linked package of benefits that went with non-work – welfare, Medicaid, Food Stamps. Meager as those benefits were, they were often economically preferable to a minimum-wage job without health care or other assistance, and with the added costs of child care. Changing that system was not just a matter of imposing work requirements, but of smoothing the path into the workforce and toward self-sufficiency. Medicaid eligibility was delinked from welfare and linked instead to income, starting at 100% of the poverty level and reaching 185% in the Affordable Care Act. Together with the State Childrens' Health Insurance Program, expansions of the Earned Income Tax Credit, the Child Tax Credit, the Refundable Additional Child Tax Credit, the Child and Dependent Care Credit, the Make Work Pay Credit, expansion of child care, the after-school and summer food programs, and others, we have created a safety net that extends well into the low-income working population. These individuals, too, are both takers and givers – they are working hard, contributing to the economy, and while some of them may not pay federal income taxes at the moment, as they move up, they will.

 This dramatic reorientation of the safety net didn't just happen; most of these initiatives had significant bipartisan and cross-ideological support. Not only do they provide a ladder out of poverty and reward work, they also make possible the relatively low-wage, low-security labor market that gives employers enormous flexibility. Conservatives used to argue, for example, that raising the EITC was a better alternative to raising the minimum wage, and they mostly won that fight. The result is that low-wage employment is essentially subsidized, and businesses are able to hire at very low cost and low commitment, with none of the barriers to either hiring or firing that are common in Europe. Paul Ryan, Mitt Romney and others in the current wave of conservatism seem to have entirely forgotten the merits of these innovations, and in their promise to protect programs only for the very, very poor, they threaten to restore the hopeless poverty traps of the 1970s and 1980s.

 It's also worth noting that most members of the “Nation of Takers” probably don't think of ourselves as “takers.” In her important recent book, The Submerged State, Suzanne Mettler of Cornell looked at data asking people whether they had ever benefited from a government social program. While most participants in the classic, older transfer programs were aware that they had benefited from programs, most of the newer programs, especially those delivered through the tax code, were invisible to a majority of their beneficiaries. (Even 45% of Social Security recipients said they had never used a government program, which may reflect the belief that they are receiving benefits they've paid for.)

 While many on the left latched onto this data as evidence that Americans, especially conservatives, are hypocrites who revel in public benefits while maintaining an anti-government stance, there's really much more to it than that. Delivering benefits through “submerged state” programs has broken any kind of connection between citizens and the benefits we receive. We can't have a clear debate about whether we're a “Nation of Takers” or whether these benefits are essential to maintaining the promise of a middle class country if most of us don't even know the role that government plays in our lives. Conservatives and liberals built the submerged state together, often sharing a preference for delivering benefits through the tax code. But a concerted effort to reduce the long-term budget deficit, with tax reform at the center of it, creates an opportunity to surface submerged programs and replace them with far more efficient, visible, direct programs. When the public is fully aware of the benefits its receiving, its possible that voters will recoil in shock at the degree of their dependency, or perhaps they will regain a healthy respect for the role of government in providing some of the security that helps them take full advantage of their capacities and opportunities.

 It's disappointing that Romney shows no interest in either drawing out the submerged state or in the bipartisan project (of which his health reform in Massachusetts was a part) of smoothing the path to economic success for families. Instead, he just sees half the country as people who can't be convinced “that they should take personal responsibility and care for their lives.” That's a very strange view of this country and a tragic development in modern conservatism.

 

 

Who's the Boss?

[This article originally appeared in The New Republic]

On August 14, several hundred coal miners joined Mitt Romney at the Century Mine near Bealsville, Ohio, to cheer the Republican nominee as he denounced a “war on coal” by the Obama administration.

Two weeks later, an official of the company that owns the mine, Murray Energy Corp. (which has given more than $900,000 to Republican candidates in the last two years, far more than any other coal company) admitted that the miners were not all there by choice. “Attendance at the Romney event was mandatory,” Rob Moore, the chief financial officer of Murray Energy told radio host David Blomquist. Mandatory, but unpaid. Because the mine was closed for the Romney event, miners lost a day of pay.

Is this legal? Is this right? Interestingly, just a few days after the rally, the F.E.C. decided a case involving an employer in Hawaii that required its employees to campaign, on their own time, for Democratic congressional candidate Colleen Hanabusa. (The employer happened to be a union, but the case had to do with its staff, not its members.) In what might seem like a reversal of partisanship, the Commission’s three Democrats supported the general counsel’s judgment that such coercion violated the Federal Election Campaign Act, which  forbids employers from coercing workers to contribute to a campaign. But its three Republicans argued that because the work was part of an independent effort by the union, and didn’t involve contributions to the campaign itself, the law didn’t apply: A union or corporation’s “independent use of its paid workforce to campaign for a federal candidate post-Citizen's United was not contemplated by Congress and, consequently, is not prohibited by either the Act or Commission regulation.” Without a majority on the Commission, it was unable to act.

In the view of the three Republicans on the FEC, then, Citizen’s United means not only that a corporation or union can deploy money in an independent effort to affect the outcome of an election (including money that rightfully belongs to its shareholders), but that it can deploy any other resources it controls—including its employees’ time, both on and off the clock.

Consider that the next time you hear an opponent of campaign finance laws describe the issue as a choice between “freedom” and regulation. In this vision of the world, the unlimited freedom of corporations means that your own rights as a citizen—to participate, or decline to participate, in the political process on your own terms—are surrendered. As the scholar Corey Robin has argued, the greatest threats to our individual liberties come not from anything the federal or state government does, but from these constraints large and small imposed by private-sector employers on their employees. (I emphasize private-sector, because it would be plainly illegal for any public agency to require non-political employees to participate in campaign activities, under state and federal civil service laws, and the same is true of non-profit charities, under tax law.)

One might hope that there is some remedy in employment law—surely a company can’t fire you for your political activity, or inactivity, in your free time? The answer, unfortunately, isn’t so clear. The doctrine of “at-will employment”—an employer can fire you at any time, for any reason or no reason—is quite sweeping, and political affiliation or activity is not protected under Title VII of the Civil Rights Act. Law professor and blogger Eugene Volokh recently published a thorough analysis of state and federal statutes and case law affecting employees’ rights to free speech and political activity, reporting that “about half of Americans live in jurisdictions that protect some private employee speech or political activity from employer retaliation.” But, he explains, many of those protections are quite narrow, and apply only to employers coercing employees to vote a certain way, or retaliating against them for signing petitions, as is the law in both Ohio and Hawaii.

“I am not sure such restrictions on private employers are a good idea,” Volokh, a conservative libertarian, wrote. After all, “employees are hired to advance the employer’s interests, not to undermine it.”

After declaring that “corporations are people,” Mitt Romney earlier this year clarified that what he really meant was that corporations are made up of people—employees and shareholders. But if both the employees’ time and the shareholders’ money can be deployed by the corporation to advance what management sees as the company’s interests, overriding employees’ and shareholders’ own rights as citizens, they are hardly people at all.

It’s difficult for many of us who are educated, white-collar workers with relatively benevolent employers to appreciate the magnitude of the constraints on freedom that are routine elsewhere in the workforce. We might imagine we would quit if our boss ordered us to campaign for a candidate, even one we supported. But many Americans don’t have that freedom—nor the freedom to refuse a drug test or a work schedule that requires them to be on call at almost all times. They face strict parameters about what they can wear, how they can style their hair, when they can use the bathroom, and whether they have access to a phone in order to be reached in a child-care emergency. Libertarians, who believe that only government can restrict freedom, are blind to these encroachments on liberty.

The Ohio rally and Hawaii decision are small blips in the campaign season, and we don’t know how widespread these practices are. But they should serve as a sharp reminder that the choice in Citizens United and other debates about political money is not between freedom and regulation, but between real freedom for individuals and the sweeping power of concentrated wealth.