My Friday column looks at a few myths about the federal social safety net — in particular, how generous it is, and whom it helps most. As I promise in the column, here’s an annotated version of the questions and answers.
1) An elderly person receives about how much in federal spending for every $1 received by a child?
The answer is $7, according to the Urban Institute’s “Kids Share” report. If you include state and local spending, the ratio drops to about 2.2.
2) As of July, unemployed workers had been looking for a job for 32 weeks on average. What is the maximum amount of time any U.S. worker can currently receive unemployment benefits?
A) 99 weeks
B) 63 weeks
C) 30 weeks
The answer is 30 weeks, according to a recent rundown from the Center on Budget and Policy Priorities. And that’s true only in Massachusetts. Almost everywhere else in the country, workers max out after 26 weeks. There was a time when a federal program extended the total number of weeks to as high as 99 in some states — a number that continues to capture the imagination of some pundits — but that has not been the case for several years.
3) Which income group receives more than half of federal housing subsidies?
A) Households with incomes below $30,000
B) Households with incomes between $30,000 and $100,000
C) Households with incomes above $100,000
The answer is households with incomes above $100,000, according to the Center on Budget and Policy Priorities: “more than half of federal housing spending for which income data are available benefits households with incomes above $100,000.” Subsidies are skewed toward upper-income families primarily because of the mortgage interest deduction, which disproportionately benefits high-income families (who are more likely to both buy big homes and itemize their taxes).
4) What percentage of American households pays nothing in federal taxes?
A) 47 percent
B) 33 percent
C) 14 percent
The answer is 14 percent.
Here’s why you might have thought the answer was 47 percent: In his secretly recorded speech, Mitt Romney said “47 percent of Americans pay no income tax.” That number took on a life of its own, and was often repeated to incorrectly refer to the share of Americans who didn’t pay any taxes. At the time it was true that about 47 percent of households paid no federal income tax, but most of those allegedly freeloading households were still liable for payroll taxes, among many other kinds of taxes.
As of 2013, about 43 percent of households didn’t pay any federal income taxes, but of that group, about two-thirds paid federal payroll taxes, according to the Tax Policy Center. That leaves around 14 percent who pay neither federal income nor payroll taxes, most of whom are elderly. The video below, from Tax Policy Center, does a great job of explaining the breakdown.
In the clip, Roberton Williams also adds that “when we account for payroll taxes, property taxes, state and local income taxes, sales taxes, gas taxes, and sin taxes on tobacco and alcohol, it’s nearly impossible for a person to avoid paying at least some tax.”
5) Which of the following takes the largest toll on the federal government’s bottom line each year?
A) Social Security
B) Defense spending
C) Tax expenditures (loopholes, deductions, etc. in the tax code)
Estimates vary a little, but those I’ve seen say total tax expenditures amount to foregone federal revenue of over a trillion dollars. This report from the Tax Policy Center, for example, says $1.4 trillion for the 2014 fiscal year, based on Treasury data, and the Congressional Budget Office agrees, citing data from the Joint Committee on Taxation. The Government Accountability Office used an estimate of $1.1 trillion for fiscal 2013. By contrast, defense spending for FY 2014 is estimated to be around $600 billion (the exact number depends on what you count) and Social Security around $700 billion (or $845 billion if you include disability insurance outlays too). You can find more details from the Congressional Budget Office and the Center on Budget and Policy Priorities (which has a helpful pie chart for FY 2013).
Total federal outlays, for reference, are around $3.5 trillion for FY 2014, meaning that tax expenditures are equivalent to about a third of federal spending.
Among the biggest expenditures are for housing (particularly the mortgage interest tax deduction) and health care (particularly the exclusion for employer-sponsored health insurance).
6) Let’s say you’re a single male who’s earned the average wage all your life, and you’re turning 65 next year. What’s the difference between what you paid in Medicare taxes and what you can expect to receive in Medicare benefits?
A) I’ll receive about as much out as I paid in.
B) I’ll receive about $27,000 more in benefits than I paid in.
C) I’ll receive about $127,000 more in benefits than I paid in.
The answer is $127,000: about $70,000 paid into the system if you worked every year since you turned 22, and about $197,000 in benefits received in the years following your retirement at 65, assuming an average life expectancy. It comes from the Urban Institute’s “Social Security and Medicare Taxes and Benefits over a Lifetime” report. The numbers are given in 2013 dollars, and they assume a 2 percent real discount rate (to account for alternative ways people could have invested their money if they hadn’t had it stripped from their paychecks). They also represent “averages for hypothetical workers with specific work histories and longevity characteristics.” More details on methodology here.
7) What percentage of people who have been on Medicare say they “have never used a government social program”?
A) 10 percent
B) 20 percent
C) 40 percent
This is from Suzanne Mettler’s excellent book, “The Submerged State: How Invisible Government Policies Undermine American Democracy.” She reviews a survey in which respondents were asked upfront whether they had “ever used a government social program, or not.” About 43.5 percent of respondents said they had. Later on, the survey asked whether they had ever benefited personally from any of 19 federal policies (including Medicare, food stamps, Pell grants, etc.), and here 91.6 percent they had benefited from at least one (i.e., about double the share that had answered affirmatively to the broader “government social program” question).
Table 2.1 on p. 38 of the book gives the amusing breakdown of what share of self-reported beneficiaries of each programs had said they never used a government social program. For Medicare, the share was 39.8 percent. For welfare/public assistance, it was 27.4 percent.
8) The average food stamp (SNAP) benefit is about how much per person per meal?
This is also from the Center on Budget and Policy Priorities (which, as you can tell, does a lot of work on the social safety net, and whose scholars were very helpful as I put together the column). The center finds that “the average SNAP household received about $275 a month in benefits in fiscal year 2013. The average recipient received about $133 a month (about $1.48 per meal).”
9) According to a 2012 Pew survey, which group is more likely to have ever benefited from at least one of the following programs targeting the poor/unemployed: food stamps, unemployment benefits, welfare or Medicaid?
C) Both about equally likely
The Pew Research Center surveyed Americans in 2012 about whether they had ever received any of various social programs (including those aimed at the poor and those granted to the elderly and their survivors). It found that 40 percent of conservatives and 42 percent of liberals had received at least one of the major programs targeting the poor or unemployed (food stamps, unemployment benefits, welfare or Medicaid). The difference was not statistically significant. There was a larger split among people who identified with a political party (34 percent of Republicans, 47 percent of Democrats).