Welfare for the Rich

One must avoid the risk of increasing still more the wealth of the rich and the dominion of the strong, while leaving the poor in their misery and adding to the servitude of the oppressed (Populorum 33, Pope Paul VI).

Structures of Sin Index

The data appear to prove the thesis: the rich are getting richer, the poor are getting poorer. This is contrary to the predictions of free market economists, who insist that a properly operating marketplace, over time, will tend to spread wealth around rather than concentrate it. Something is obviously going on, and the name of the game is income distribution. Typically this is thought of as a "problem" relating to income distribution from the rich to the poor, but the actual data indicate that most of the transfer is the other way -- from the poor, the working and middle classes to the economic and power elite.

Welfare for the Rich, Annual Costs, "Broad Definition"

Interest on the national debt $241 billion
NATO and the Persian Gulf $60 billion
Affluent mortgage interest deduction $6.4 billion
Social Security for the affluent $39.3 billion
Medicare for the affluent $25.8 billion
Corporate welfare $107.7 billion
Annual total: $480.2 billion
1994 $s for means-tested poverty programs $246.2 billion
Means tested programs as percent of welfare for the rich: 51%


Detail:

NATO and Persian Gulf expenditures are low estimates based on several sources, including the Cato Institute; this relates to "welfare for the rich" on two points: (a) since the collapse of communism (and even before, according to many analysts) NATO has not had much of a reason for existence and appears to relate more to the desire of the trans-Atlantic elites for "unity" than for any rational defense need. Plus, European taxpayers naturally prefer to pay lower taxes, and if they can get the US taxpayer to subsidize the defense of Europe, that saves European tax dollars at the expense of the U.S. taxpayers. The Persian Gulf war was fought to defend the rights of mega-millionaires (who aren't even U.S. citizens) to exploit oil resources, whose primary beneficiaries are U.S., European, and Arabic oil importing and refining interests together with Japanese industrialists (none of whom are on AFDC).

The Affluent Mortgage Interest Deduction is from the Progressive Policy Institute, and represents the increased taxes that would be paid by the wealthy if the ceiling on mortgage principle was reduced from $1M to $300,000 and the deduction of interest on consumer loans secured by real estate was phased out.

Social security and Medicare for the affluent was calculated from Statistical Abstract of the U.S. figures: 2.6% of seniors have incomes greater than $75,000, 4% have incomes from $50 - 75,000, and 18.1% have incomes from $25 to 49,000, or 24.7%. This figure was reduced to 20%, because the lower end of the $25 - 49K group would be placed in poverty if the average social security benefit was eliminated. This was multiplied times (a) $196.4B in social security payments to retired workers, and (b) Medicare reimbursements of $129B. These calculations are only proxies, and it is probable that the actual numbers would be higher. Higher income people receive higher benefits and may utilize Medicare more extensively for more expensive procedures, especially since poor people often die before reaching age 65.

At these rates, over a ten year period, this Aid to Dependent Rich People transfers nearly five trillion dollars in economic assets to the benefit of the rich, powerful, and politically connected (not counting the pork and waste in the defense budget). Even though the author is not an economist and these figures are only in the neighborhood of ballparks (and could be criticized for ideological bias), they nevertheless indicate something very troubling that is going on with the national accounts.