The Wurzelbacher Effect

Government has been spreading the wealth for many decades.

WHATEVER Tuesday's voting brings, the national conversation sparked by the driveway encounter between Barack Obama and Joe the Plumber seems likely to have a lingering, and potentially destructive, effect. Consider: Eight years ago, George W. Bush was selling himself to the country as a compassionate conservative. Today, it is hard to detect even the faintest note of compassion in John McCain's railing against Mr. Obama as "redistributionist in chief."

The tired trope of campaigns past -- Democrats as voracious tax-and-spenders -- has been augmented in the closing days of Campaign 2008 with the accusation of socialistic wealth-spreading. The two charges are related but fundamentally different, in ways that matter for the future debate about the proper role of government. The tax-and-spend charge goes to the question of the size of government; the spread-the-wealth charge goes to the core of government's function. It is fair to worry about taxes being so high that they impede growth, or the safety net so comfortable that it discourages work. But Mr. McCain's anti-redistributionist argument, taken seriously, has profound implications for the nature of modern American government and the stability of the post-New Deal consensus about the government as ultimate safety net.

Take a look at the biggest-ticket items in the federal budget: Almost all, outside of spending on defense and veterans, are premised on at least an element of wealth-spreading. In Social Security, as the Congressional Budget Office has calculated, retirees who earned less get back a greater share of what they put into the system than higher-earning retirees; the Supplemental Security Income (SSI) program provides extra help for low-income elderly or disabled. That's wealth-spreading. Ditto Medicaid, the shared federal-state program to provide health care to the poor; unemployment insurance; the State Children's Health Insurance Program, for children whose families earn too much to qualify for Medicaid; food stamps; and Temporary Assistance for Needy Families, the modern welfare program. Medicare, because of a sensible change adopted under the Bush administration, requires better-off seniors to pay higher premiums; it provides extra subsidies for low-income beneficiaries to pay for prescription drugs. The bulk of federal spending on education goes to students in disadvantaged schools (Title I for kindergarten through 12th grade) and to help lower- and middle-income students pay for college (Pell Grants). Most pointedly, since it mirrors the refundable credit that Mr. Obama proposes, the earned-income tax credit -- which Mr. McCain described in 1999 as a "much-needed tax credit for working Americans" -- provides extra income to the working poor.

It's not at all clear that Mr. McCain actually buys into -- or has seriously thought through -- the implications of the conversation he has unleashed. "Taxes pay to keep our government secure, to help those who can't help themselves and other functions of government," he told CNN's Larry King the other night. But a graduated income tax, he argued, is "a far cry from taking from one group of Americans and giving to another. I mean, that's dramatically different." Really? The conservative economists Milton and Rose Friedman proposed a "negative income tax" in 1962, and President Richard Nixon proposed a version of it in 1969.

Ironically -- perversely, even -- the railing against wealth-spreading comes at a time when the wealth has been spread less evenly than ever, although the economic downturn will no doubt reverse the trend temporarily. As Robert Greenstein of the Center on Budget and Policy Priorities testified before the House Ways and Means Committee the other day, in 2006 the share of pre-tax income flowing to the top 1 percent of households reached its highest level since 1928. The share of after-tax income going to the top 20 percent and the top 1 percent in 2005 was the highest on record since the Congressional Budget Office began analyzing the data in 1979. Some of this is due to the structure of the Bush tax cuts, which -- as Mr. McCain pointed out at the time they were enacted -- disproportionately favored the wealthiest Americans. Mr. Obama's proposal to roll back the top bracket tax cuts and to bolster the bottom with refundable credits is an effort to address this inequity.

"I don't know when we decided to make a virtue out of selfishness," Mr. Obama said in Missouri on Friday. Not quite "ask not what your country can do for you" lyricism. But a start, perhaps, in explaining to the country the essential common sense of supposed gaffes: It is patriotic, as Democratic vice presidential candidate Joseph R. Biden Jr. said, for the rich to pay more for a country that has helped them gain more; it is"good for everybody," as Mr. Obama told Joe Wurzelbacher, when you spread the wealth around. These represent, in fact, a rather mainstream view -- and not a bad governing philosophy for the country in its current straits.