Other programs, like Medicare, are provided by the government, but eligibility is mostly automatic, and recipients have paid into them. Beneficiaries of such programs are somewhat less likely to realize they’re on a government dole than beneficiaries of means-tested programs.

Then there’s what Mettler calls “the submerged state.” These policies are mostly, though not exclusively, tax breaks. They include the much-beloved home-mortgage interest deduction and the tax exclusion for employer-provided health care. Recipients of these policies — and there are tens of millions of them — are rarely cognizant that they’re benefiting from a government program.

But they are. “Indirect social policies offer benefits that are comparable to direct social benefits both in their purposes and in their costs,” Mettler and Koch write. “Both are targeted to specific groups of people, aimed to reward some kind of activity or some class of persons whom policymakers deem worthy of public support. From an accounting perspective, as well, both types have the same effect: They impose costs on the federal budget, whether incurred through fiscal obligations or lost revenues.”

The costs are significant. Huge, in fact. Tax expenditures now cost the federal government $1 trillion annually — more than Medicare and Medicaid combined. And they’re regressive.

There is also a pattern to these programs: The more a government social program benefits wealthier Americans, the less obtrusive it is. We design policies for the poor in ways that make it hard to escape the knowledge that the government is providing help. But richer Americans rely on programs that are “submerged.”

One of the things to pay attention to in Mitt Romney’s latest South Carolina ad is his implicit defense of the state’s “right-to-work” law, which makes it more difficult for unions to organize. “The National Labor Relations Board, now stacked with union stooges selected by the president, says to a free enterprise like Boeing, ‘You can’t build a factory in South Carolina because South Carolina is a Right to Work state,’” Romney says in the ad. “That is simply un-American. It is political payback of the worst kind.” Combine this with his attack on President Obama as a “crony capitalist,” and I wouldn’t be surprised to see Romney tout right-to-work laws as part of his strategy for reviving the economy.

The problem, of course, is that said laws do nothing of the sort. The Economic Policy Institute has a great primer on the actual effect of right-to-work laws on workers, wages, and employment. On the whole, RTW laws “reduce wages by $1,500 a year, for both union and nonunion workers”, “lower the likelihood that employees get healthcare or pensions through their jobs…for both union and nonunion employees”, and “have no impact whatsoever on job growth.” Moreover, the job growth attributed to right-to-work laws has more to do with warm weather and population growth than it does with a particular legal regime.

It is time to transition from repairing the enormous structural damage done by the cataclysm the president inherited to establishing policies to restore the American middle class, reduce inequality, and improve America’s competitiveness. Here are two ideas for him to consider.

First, an idea that will not only generate greater equity and simplicity in the tax code but also create a powerful ideological divide between the president and Romney. The president should propose treating capital gains as ordinary income. The preference given to capital gains—now taxed at a mere 15 percent even for those in the top income brackets—serves no economic purpose, and magnifies the inequity in the tax code. Why give any preference to income that results from the sale of an appreciated asset as opposed to income that is the product of work? There is no compelling answer to this question, and absolutely no credible evidence that investment will be hindered if the capital-gains preference is eliminated.

Indeed, the Bowles-Simpson report suggested the elimination of the capital-gains preference, and the Bipartisan Policy Center, which is chock-full of prominent government officials of both parties and private-sector executives, has also endorsed the idea. Bizarrely, the Republicans are going in just the opposite direction: They want to eliminate all taxation of dividends and capital gains, thus increasing inequity.

Second, the moment is ripe for investment in education. We all know that the era of competition based on intellectual capital is upon us, and the United States is at great risk of falling behind China, India, and Europe. One problem magnifying this is the burden of student debt, which is surging as entry-level jobs are either unavailable or exist only at wage levels insufficient to cover debt payoffs. The president should embrace an idea originally proposed by Milton Friedman and James Tobin, recently pushed by Robert Reich in his wonderful book Aftershock, as well as by me here in Slate two years ago. It’s simple: Have the government pay for college education for students in return for an agreed-upon repayment of a fixed percentage of post-graduate income. The beauty of this is that all barriers to education are eliminated. Everybody can go: No cash is needed up front. And the magnitude of your repayment is calibrated to what you earn, permitting freedom of choice with respect to jobs. Does this require those who earn more to pay more? Yes, but that is a fair transaction. Repayment is calibrated to the payback you get from the education. The numbers can be arranged such that the government is made entirely whole and educational opportunities are increased exponentially. And we would eliminate the problem of student debt that now crushes opportunity.

All year, Republicans have demanded an end to programs the middle class created to aid the majority, the 99 percent. The GOP wants to reverse the new banking regulations that were passed in an attempt to prevent another economic collapse caused by risky Wall Street practices. The GOP tried to to rescind the healthcare reform law that prevents insurance companies from terminating coverage when beneficiaries get sick and prohibits the practice of refusing coverage to people with pre-existing conditions.

Influential Republicans this year have called for repealing laws forbidding child labor, laws guaranteeing minimum wage and laws protecting the environment. They’ve demanded elimination of federal funding for organizations like the Public Broadcasting System that educates preschoolers, Head Start, which provides opportunity to poor children, and Planned Parenthood, which uses 97 percent of its funds to provide general, obstetrical and gynecological medical care to women, many of whom are rural and poor.

Republicans have decided to be the party of Henry Potter, the “meanest man in the county,” a man about whom George Bailey’s father said: “he’s a sick man, frustrated. Sick in his mind, sick in his soul, if he has one.”

Like Potter, Republicans deride compassion and community as character defects.

edkohler:

soupsoup:

Why people hate Congress, in one chart

based on data from Wealth, Income, and Power

This doesn’t make me hate congress. But it does help explain why they seem so detached from the problems facing most Americans.

Both The New York Times and The Washington Post have separate reports today about the widening wealth gap between members of Congress and the people they represent. Almost half of all Congresspeople are millionaires and their median net worth has climbed to $913,000, compared to $100,000 for the rest of America households. According to the Post, that number drops to $725,000 when excluding home equity (and adjusting for inflation), but the same median figure for American families is just $20,500. And that gap has only grown wider in recent years. Read more.