Romney and Obama largely ignore the most important issues

Amid all the drama of the presidential debates it is striking to notice what issues garner little attention, whether from questioners or from the candidates. When the Supreme Court upheld Obamacare it was widely suggested that it had turned the 2012 presidential campaign into a battle over the future of health care. That has hardly been the case. Likewise the selection of Paul Ryan as Mitt Romney’s running mate suggested that the unsustainable path of welfare, pension, and entitlement spending on which the United States (like the rest of the rich world) is set should be a focal point of the debate. That hasn’t happened either. For Romney, the focus has been jobs, jobs, jobs. For Obama the tactic has been to make voters think Romney will be the rich man’s president.

The main reason for Romney’s focus on the economy (and Obama’s focus on Romney) is obvious. There is no better ground from which to make voters look past the areas in which they disagree with you than to convince them that you will lead the nation to prosperity and economic health. When unemployment has been hovering around 8% for as long as it has, this political strategy is a no-brainer.

And yet the fact remains that the growing debt of the United States – and the unsustainability of its commitments in the form of health care and pensions to an aging population – is the single greatest threat to the future prosperity of this country. Despite Romney’s rhetoric, the deficit and debt cannot be fixed by closing tax loopholes and restoring the nation to econ0mic prosperity, and despite Obama’s suggestions, increasing taxes on the rich and decreasing military spending will not solve the problem either. Nor are those conservatives right who blame the problem on things like Medicaid, or provision for the poor.

The reason why the United States is on an unsustainable spending path is because of its commitments to the middle class and to the wealthy. The problem is not the redistribution of wealth to the poor, but the redistribution of wealth to those who don’t need it. Consider the picture as portrayed by The Economist:

In the rich world the cronyism is better-hidden. One reason why Wall Street accounts for a disproportionate share of the wealthy is the implicit subsidy given to too-big-to-fail banks. From doctors to lawyers, many high-paying professions are full of unnecessary restrictive practices. And then there is the most unfair transfer of all—misdirected welfare spending. Social spending is often less about helping the poor than giving goodies to the relatively wealthy.

That picture is quite general, but in another article The Economist outlines the problem more concretely:

For all the conservatives’ insinuations of loafers living on handouts, America spends less than half as much as the average OECD country on cash transfers for people of working age. At the same time benefits in kind, such as state provision of education, health care and housing, gobble up a large and growing share of America’s budget. But according to the Centre on Budget and Policy Priorities, over half of all entitlement spending flows to the elderly and around 40% is spent on health care. The poor do not get much of a look-in. Around 10% of the total goes to the richest fifth of Americans, almost 60% to the middle three-fifths and only 30% to the poorest fifth.

If you combine tax expenditures and entitlements, America’s efforts at redistribution look even more perverse. The government lavishes more dollars overall on the top fifth of the income distribution than the bottom fifth. As Irwin Garfinkel, Lee Rainwater and Timothy Smeeding point out in “Wealth and Welfare States”, a book comparing America’s safety net with those of other countries, the federal government “spends” four times as much on subsidising housing for the richest 20% of Americans (via the mortgage-interest deduction) than it spends on public housing for the poorest fifth.

For all of Obama’s criticisms, on this point Romney is on to something. As The Economist notes, most of the deductions and loopholes Romney wants to eliminate not only reduce the efficiency of the tax system but currently favor the wealthy.

But Americans who are seriously concerned about the future fiscal health of the country might want to ask themselves, why do the richest Americans need housing subsidies? Why should programs like Medicare, or on the state level, like public education, offer expensive benefits to those who don’t even need them? Why should retirees begin to reap public benefits when they are still healthy enough to work (because the retirement age of such programs is based on the life expectancy of several decades ago)? Why does the government transfer massive wealth from the young (in the form of debt, because they don’t have it) to the old (in the form of pensions and health care, whether or not they need it)? And why does a system that directs more public spending to the middle class and to the wealthy lead conservatives to bear so much resentment to those who actually depend on a certain measure of government support?

In short, Americans should not buy into the assumption that big government is the result of care for the poor, nor should they take seriously the rhetoric that the United States government has unfairly favored the poor over against the rich. The interference of the government in the economy, government tax policy and regulation, and the close ties between money and legislation has consistently skewed the free market in favor of the wealthy and the powerful, even as it has sought to provide a minimal safety net for the poor. We should be able to talk about this problem – and the sustainability of our current track – without our conversations devolving into class warfare. As The Economist concludes,

The second lesson is that governments can narrow inequality without large-scale redistribution or an ever growing state. The 20th century’s most dramatic reductions in income gaps took place when governments, by and large, were smaller than they are today. Large, rigid welfare states proved unsustainable. But there was also a successful progressive prescription for reducing income gaps and boosting mobility by attacking crony capitalism, investing in the young (especially by broadening access to education) and creating a safety net for the poorest (particularly through unemployment insurance and pension schemes). Worryingly, governments in some of the countries where inequality has risen most seem to have forgotten that.

[Note: this post is the sequel to yesterday’s post on inequality.]


About Matthew J. Tuininga

Matthew J. Tuininga is the Assistant Professor of Moral Theology at Calvin Theological Seminary in Grand Rapids, Michigan.

Posted on October 17, 2012, in 2012 election, Barack Obama, Democratic Party, Mitt Romney, Republican Party, Welfare State and tagged , , , , , , , , . Bookmark the permalink. Comments Off on Romney and Obama largely ignore the most important issues.

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