Contrary to popular opinion: Deficit cuts are colorblind

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Why should you care about the debt ceiling? What factor does race play in this debate, and who is really benefiting from government programs?

With an August 2 deadline for Congress to raise the debt ceiling — think of it as America’s credit card limit, the amount of money the nation can borrow — President Obama wants to resolve the issue and remove it as a factor for the 2012 election. The U.S. currently borrows 42 cents of every dollar it spends, and has never defaulted on its loan obligations. But if the government fails to act, the government will go into default on its debt obligations, potentially leading to all sorts of economic catastrophe, including more recession and unemployment, and a decline in the value of the dollar.

The current battle between the president and Congress over the debt ceiling is important for another reason. A Tea Party Republican-controlled House of Representatives appears to hold the nation hostage, demanding cuts in social welfare programs such as Social Security, Medicare and Medicaid in return for raising the nation’s borrowing limit.

Meanwhile, a stark difference in political philosophies has emerged. While Democrats such as Obama want to increase the top tax rates and the close tax loopholes to generate more revenue, Republicans never saw a tax cut or a social spending cut they didn’t like. Some liberals and progressives are even accusing conservatives of sabotaging the U.S. economy for the sake of scoring political points.

“This is part of the problem with a political process where folks are rewarded for saying irresponsible things to win election or obtain short-term political gain,” the president said recently.

Part of the electoral success of the Republicans, and it is a mindset that extends far beyond that party, has been to color code America’s social welfare programs. Low- and moderate-income whites vote against their interests when they accept the Republican story that government programs are handouts, and their beneficiaries are lazy and undeserving, living off of hard-working Americans.

Racial stereotypes such as Ronald Reagan’s Cadillac-driving “welfare queen” come into play — reflecting the sentiment, however subtle or explicit at times, that the primary recipients of government largess are blacks and Latinos. But the reality couldn’t be further from the truth.

According to a paper by Suzanne Mettler, Clinton Rossiter Professor of American Institutions at Cornell University, half of Americans believe they don’t benefit from government programs, when they really do.

And the deck has been stacked against Obama’s quest to reform the social welfare system and make it fairer and more responsive to the needs of everyday Americans.

Mettler points out that there is a “submerged state” of federal programs that benefit private citizens, without them even knowing it. And the president’s efforts to improve this submerged state — by reforming the country’s regressive taxation policy, increasing access to higher education and tackling the health care crisis — has brought with it much opposition.

One obstacle has been the organized interest groups, the corporate lobbyists who give financial contributions to Republicans and moderate Democrats in order to block reform. For example, private health insurance companies lobbied against the proposed “public option” in health care reform. Obama took on the lenders who profited handily from student loans, and the banks fought back. And the real estate lobby and others went on the attack when the president sought an end to regressive, inequitable tax policies, including tax breaks to the wealthy.Moreover, most Americans, believing the mythology of rugged individualism and bootstrap levitation, refuse to believe they benefit from government programs. People polled in Mettler’s study were asked if they have used a government social program, and whether they have benefited from any of 19 federal social policies. Of those who said they “have not used a government social program,” 64.3 have used a 529 or Coverdell college savings plan, 60 percent have taken advantage of home mortgage interest deductions, and 53.3 percent have had a student loan.

In addition, 44.1 percent of the participants have received Social Security retirement and survivor benefits, 43.1 percent have benefited from a Pell Grant, and 43 percent have received an unemployment check. Meanwhile, 40.3 percent of those surveyed benefited from the G.I. Bill, 39.8 percent had Medicare, 27.8 percent were on Medicaid, 27.4 percent were on welfare, and 25.4 percent depended on food stamps. Yet, like the person who tells the government, “Keep your hands off my Medicare!”, these folks claim government isn’t helping them. Chances are they are wrong, and they are white:

The median annual Social Security payout is highest for whites, which is due to their higher taxable income. Annual benefits for blacks, Hispanics and Asians range from 69 to 89 percent of those for whites.

Whites are 78 percent of Medicare enrollees, while African-Americans are 10 percent and Latinos are 4 percent. In addition, blacks make up 21 percent of Medicaid recipients, and Hispanics 28 percent, whites are 43 percent of people who rely on the program.

Nearly half of all American children and teenagers will live in a home that relies on food stamps. And over 44 million people, or one in seven Americans, currently participate in the food stamp program. In 2006, more white households are on food stamps (43 percent) than their black (33 percent) or Hispanic (19 percent) counterparts.

In recent years, whites have accounted for 60.3 percent of enrollees in the WIC program, the federal program for women, infants and children. Blacks make up 19.6 percent of people enrolled in WIC.

Based on the most recent data available, the typical welfare recipient is a white woman. Of the parents who received AFDC (Aid To Families With Dependent Children), 39 percent were white, 37 percent were black, and 18 percent were Hispanic.

When it comes to financial aid for college, 63.3 percent of Pell Grant recipients are white. At the same time, 11.8 percent are black, 13.2 percent are Latino, and 6.8 percent are Asian.

Although people of color are more likely to become jobless, African-Americans and Latinos are 25 percent less likely to receive unemployment insurance. This is because they are disproportionately represented among low-wage, part-time and seasonal jobs that are less likely covered by unemployment benefits.

Ironically, those red Republican states that despise government handouts the most also depend on federal assistance the most. For example, Alaska receives a generous $1.84 from the federal government for every dollar it pays in federal taxes. Likewise, Kentucky receives $1.51 from Uncle Sam, and South Carolina gets $1.35. But deep blue New York receives a mere 79 cents on the dollar. California gets 78 cents, and New Jersey only gets 61 cents.

In the end, for all of the talk about black welfare queens, all Americans benefit from government social welfare programs across the board, regardless of race or ethnicity. Unfairly criticized, vilified and targeted for the Republican chopping block, the nation’s safety net has provided millions of people with a leg up and a way out, out of poverty and into the middle class.

And while the common misconception is that racial minorities have unfairly benefited from these programs, the debt ceiling cuts are far more colorblind than anyone could have imagined.