A Brief History of Welfare for Middle-Class Americans

Are tax expenditures the equivalent of government handouts for the middle class?

by Jamelle Bouie

Ezra Klein, looking at the Pew Foundation's Tax Expenditure Database, notes that tax expenditures—subsidies and rebates—are effectively welfare for middle-class Americans:

What's interesting about tax expenditures, I think, is that they're basically the welfare state for the middle class, cleverly arranged such that they don't look like the welfare state for the middle class.

If every year, the government sent every American—from the richest CEO to the greenest public-school teacher—a check covering 30 percent of their health-care costs, we'd think that a bit weird. We'd think it much weirder if we only sent the checks to the workers who happened to be at firms that offered benefits. It would certainly make it very difficult to argue that we shouldn't be subsidizing health-care insurance for the poor and the jobless.

Speaking from experience, people can get genuinely angry when you suggest that they are the recipients of massive financial aid from the federal government. But it's true! The money we spend on tax expenditures for middle and upper class families dwarfs the amount spent on food stamps and other, disparaged forms of welfare.

The truth is that direct federal assistance for middle-class—and overwhelmingly white—families has a long history in American policymaking. In the late 19th century, massive federal intervention in education and public health vastly improved the station of millions of Americans.

More significantly, in the New Deal and World War II era, a huge array of federal programs provided Americans with valuable tools to advance their position, from old age insurance, to job training, to low interest loans and affordable housing. The G.I. Bill, to use one prominent example, gave billions in benefits to returning veterans, from direct subsidies for education—to pay for books, fees, tuition, etc.— to home loans backed by the Veteran's Administration. Strong labor laws protected workers from the deprivations of employers, and helped boost incomes throughout the 1940s, 50s, and 60s.

I could continue in this vein for a long time. To a very large degree—more than ever acknowledged in the political mainstream—the American middle class is a direct product of targeted federal policy. Pew's database of tax expenditures are a nice reminder of that history. My wish is that this were more well-known; if middle and upper-class families realized their huge stake in a functioning government, they might be less inclined to empower the wrecking crew.