The “real Washington” — where income redistribution happens

Robert Samuelson has a worthwhile take-down of the notion that Washington operates for the benefit of the rich, in defiance of the will of the people. That view has long seemed ridiculous to me. If it were valid, how would we explain the income tax structure, wherein the richest 10 percent pay 55 percent of the freight? How would we explain the corporate tax rate, which is the highest among developed nations? How would we explain the massive regulatory burden imposed on corporations?

How would we explain the Clean Air Act Amendments of 1990 or the Civil Rights Act Amendments of 1991, in which Congress, largely overriding the concerns of the business community, legislatively overturned Supreme Court interpretations of existing law with which the “civil rights community” disagreed? How would we explain the more recent “Lilly Ledbetter” Act, which performed the same task?

Washington lobbyists earn their money, to be sure. But they don’t do so by thwarting the will of the people. In my view, they do it mainly through “fixes” on matters as to which the public would be largely indifferent. On big ticket items of public concern, lobbyists generally just try to prevent the burdens imposed on their clients from over-running the bounds imposed by reality.

Samuelson persuasively argues that in “the real Washington,” benefits “go mainly to the poor and middle class, while politicians of both parties live in fear that they might offend ‘the will of the people’ – voters.” He notes that, since 1990, annual spending on programs conferring benefits on low-income Americans – such as Medicaid, Food Stamps, Pell grants, and the earned-income tax credit — has grown from $126 billion to $626 billion in inflation adjusted dollars. Similarly, federal spending per person in poverty (again in adjusted dollars) has grown from $516 dollars per year in 1960, to $4,300 in 1980, to $13,000 last year.

But the biggest income transfers are to the middle class, through Social Security and Medicare. When these programs are combined with all spending for the poor, the total is nearly $2.1 trillion, or 60 percent of 2011 non-interest federal spending.

Thus, the “real Washington” is, according to Samuelson, “is in the business of pleasing as many people as possible for as long as possible.” Unfortunately, we may be reaching the outer limits of what constitutes “as long as possible.”

Responses