The Heritage Foundation’s Attack on Government – Part II

The Heritage Foundation recently released a report opposing immigration reform, arguing that the cost of government benefits that will be paid to immigrants and their children will be much higher than the taxes they will pay.  The report does not focus only on immigrants, however.  It argues that government benefit programs are too large generally and that too many Americans are net takers, receiving more in government benefits than they pay in taxes.  The authors imply that the only means of cutting the budget deficit is to cut benefit programs.

For analysis and policy, the Heritage report is remarkable for its failure to consider four major points of interest.  First, the report says nothing about government payments that benefit upper middle class and wealthy people.  There is no mention of things like the home mortgage interest tax deduction, which provides a huge benefit to upper middle class and wealthy taxpayers, or the payment of social security benefits without means-testing, or regressive tax policies that result in Warren Buffet paying federal taxes at a rate lower than his secretary’s.  The Heritage report assumes government spending has to be cut, but considers as candidates for cuts only programs that benefit children and middle class, poor, and elderly people.  Defense spending isn’t mentioned.  The report doesn’t even consider the possibility of reducing the deficit through some tax increases on the wealthy. 

Second, the Heritage Foundation ignores the possibility that tax revenues from immigrants and moderate- and low-income workers could be increased and the cost of government benefits could be reduced by policies that favor reducing levels of unemployment and increasing wages.  That possibility is not even discussed.

Third, the Heritage Foundation ignores the fact that its numbers come from FY 2010, when the economy was depressed, unemployment was high, and wages were low.  We can expect higher earnings and greater tax revenues if we return to a period of growth, higher employment, and higher wages.

Finally, the Heritage Foundation ignores the importance of social benefit programs in protecting the middle class and the poor and providing some minimal support for our aspiration to be an equal opportunity society.  These programs – including in particular public schools -- are among the only means we have of providing some protection from the hazards of a market economy and of providing opportunities for the members of the middle class, lower-income people, and their children.  Government benefits are particularly important now: the United States has a level of income inequality that is higher than at any point since the Great Depression.  (A report on National Public Radio said income inequality is higher in the United States than it is in Egypt.)  Extremes of income inequality are bad for all of us, including those of us who are wealthy.  Besides our aspiration to live in a society that offers equal opportunity, income inequality can lead to economic disaster:  we can’t expect a growing economy if middle-class and working-class people do not have enough money to support consumer spending.  The income inequality we face is due in part to luck and government policy favoring upper income Americans:  luck in benefiting from globalization and the movement of jobs to low-wage countries, luck in benefiting from huge changes in technology and riches generated by that change, and the benefits generated from the Bush tax cuts and a steady decline in taxes for upper-income taxpayers since the Reagan administration, among other factors.  And income inequality is due in part to bad luck faced by working class and middle class families, including the disappearance of manufacturing jobs as a result of globalization and the elimination of middle management jobs with increased reliance on new technology.  Unfortunate circumstances and policies that favor the wealthy should not result in a society where working class people are reduced to poverty and middle class people live on the edge of disaster.  Well-run social welfare programs (like Social Security, for instance) that ameliorate these circumstances should be welcomed – they are welcomed, in fact.  We are a society that does not believe in letting people starve or go homeless.   We do not leave people on their own; we care for those who need care. 

For these and other reasons, it is important to repudiate the arguments made by the Heritage Foundation in its opposition to immigration reform.  If this attack on social benefit programs is successful with respect to immigration we can rest assured that it will be used to support elimination of social benefit programs generally: Social Security, Medicare, Medicaid, the Earned Income Tax Credit, extended unemployment benefits, Section 8 and public housing, Temporary  Assistance for Needy Families (TANF), school lunch and breakfast programs, the WIC (Women, Infants and Children nutrition program), and Social Services Block Grants are obvious targets.  Do we want these programs?  We do, and if it requires action to support them, then that is what needed.  The Heritage Foundation’s report depends on an ideology that we should reject.