So, we were hanging around the water cooler the other day reflecting on this "free stuff" meme. That conversation led to this guest post written by Ben Spielberg, Cecile Murray, and Bryann DaSilva. Add up their ages and you'd probably get pretty close to mine -- in other words, these millennials give me hope! --JB
At last week's Republican presidential debate, New Jersey Governor Chris Christie characterized the first Democratic debate as "a parade of, 'I'll give you this for free; I'll give you that for free.'" Senator Marco Rubio made a similar comment a few weeks ago:
"It was basically a...debate about who was going to give away the most free stuff: Free college education, free college education for people illegally in this country, free health care, free everything." Such remarks also mirror Jeb Bush's argument that black voters will back him because his "message is one of hope and aspiration," not "one of division and get in line and we'll take care of you with free stuff."
There are at least three definitions of "free stuff." The broadest would simply include all government benefits. A narrower version might apply only when people receive more in benefits than they pay in taxes. A third might refer to any net gain relative to the status quo. Under any of these definitions, the claims made by Christie, Rubio, and Bush are both biased and misleading: they attack help for people who need it while implicitly condoning favors for the wealthy.
Consider the first definition of "free stuff," preferred by Bryce Covert and Emily Badger, which refers simply to "government benefits." The Republican candidates have alluded to a subset of these: public education, Medicaid, and direct cash assistance to the poor, to name a few. But the government issues numerous other benefits as well, benefits that the politicians complaining about "free stuff" seem perfectly happy to keep intact.
For example, Rubio and Bush would cut the tax rate on capital gains below its current level (Rubio would completely abolish it); this reduced rate already provides a significant benefit to people who invest in assets (i.e., the wealthy). Politicians also regularly rail against critical housing assistance for the most vulnerable while defending or expanding expensive, regressive, and unnecessary housing tax breaks, about 70 percent of which go to those in the top 20 percent. How can it be that government benefits for poor people are "free stuff" while benefits for the wealthy are not?
We suspect Christie, Rubio, and Bush would be more partial to the second definition described above: it's "free stuff" if you receive more in benefits than you pay in taxes but not if you pay more in taxes than you receive in benefits.
Yet this approach is also flawed. It counts all of the costs of taxation but ignores the benefits of the public goods those taxes fund -- things like roads, national defense, functioning financial markets, and technology that relies on prior and ongoing government research. It also ignores both the short-term and long-term economic benefits produced by government programs, such as those that invest in children and promote a healthy and educated workforce.
While it is impossible to quantify the precise value of all of these public goods and investments, many create significantly more lasting, long-term value than what it costs taxpayers to fund them (just consider railroads, highways, and medical research, for example). These benefits arguably produce even greater value for the rich - who rely on them to do business and hold on to their fortunes - than for the middle class and poor. We suspect most people are actually net recipients of government benefits, and hence recipients of "free stuff" by this second definition.
The third way to think about "free stuff" - relative to current policy - probably mirrors our psychological conception of "free" most closely. Suppose, for example, that you opened your email today to find an unexpected $100 Amazon gift card. No matter how much money you had spent or planned to spend at Amazon, you would call this "free" money. Or imagine that you go out to dinner at a restaurant and a waiter decides to "comp" your dessert. Regardless of the overall price of your meal, you would likely consider that dessert item to be "free."
In this framework, "free stuff" from the government would be new benefits or reduced taxes relative to one's current situation. Since the Christie, Rubio, and Bush tax plans all contain massive tax cuts, they're giving away massive amounts of "free stuff," and the vast majority of that "free stuff" -- unlike the "free stuff" proposed by the Democratic candidates -- is going to the very wealthy.
Which of the above definitions you find most compelling ultimately depends on your values. Politicians using the phrase "free stuff" should make it clear just what they mean. They should also acknowledge the extent to which, under any of these frameworks, they themselves want government to provide "free stuff" -- and generally in a way that benefits the rich substantially more than those who actually need the help.
We should also remember, as Christie himself alluded to in last week's debate, that nothing is actually "free." Government is merely a tool for determining our national priorities and deciding how we're going to raise the money to implement them.
In our view, we should use that tool to reduce inequality, boost opportunity, and provide public goods that the private sector can't or won't provide on its own. We should raise enough money to fund these endeavors, and we should raise it in an equitable way, recognizing people's varied ability to pay. This philosophy has nothing to do with giving away "free stuff;" it's actually about trying to stop imbalances in "free stuff" received in the birth lottery from undermining the American dream.
We recognize that some will view the purpose of government differently. But no matter your values or how you define the term, don't bash "free stuff" for average Americans while ignoring the "free stuff" for the top 1 percent.
This post originally appeared at Jared Bernstein's On The Economy blog.