Biden Should Embrace Targeted vs. Universal approaches
I’m enthusiastic about President Biden’s proposed $2.25 trillion Infrastructure Improvement Program (American Jobs Plan) and his 1.8 trillion American Families Plan. However, I realize that the almost $6 trillion price tag on his three-part program (the American Jobs Plan, the Families Plan and the $1.9 trillion American Rescue Plan stimulus package) is a mind-boggling amount of money. A trillion is a thousand billion or 5.95 with twelve zeros.
There is, no doubt, that both the Jobs and Families Plans will be dramatically trimmed. While I have concerns that the combined plans could drive up interest rates and make government borrowing more expensive in the short run, I believe the bold audacious plans could narrow economic inequality. I do have two cautions for the administration as they attempt to sell and implement their big plans.
First, don’t over rely on universalism, be more targeted. Universal approaches attempt to affect every individual in a population, whereas targeted approaches provide services or programs to beneficiaries based on screening of demographic or behavioral characteristics. Even when you are spending trillions of dollars you should be targeting where the money is most needed.
I hope the Biden Administration avoids the temptation to employ too many universal approaches in order to secure broader appeal. I’d shy away from Medicare for all, universal day-care services and universal
student loan reductions. Universal policies such as Social Security, minimum wage laws and universal income programs provide the same benefits or minimum protections to everyone, regardless of status or group membership. By treating everyone the same, universal approaches can root out groupbased discrimination and may sometimes actually deepen inequality between groups rather than reduce it. And by providing benefits to everyone, resources that could be targeted to groups worse off instead flow to those who are better off.
Targeted policies provide benefits or protections based on group membership or status. For example, SNAP, the food stamp program, bases benefits on income level. The Americans with Disabilities Act requires public accessibility for disabled groups and affirmative action focus on historically disadvantaged groups.
My second caution is to avoid creating the perception that its targeted programs are allowing some people to get something for nothing while others have worked hard to pay for the same thing.
Americans are the most generous people on the face of the earth as demonstrated by our extraordinary level of giving to our nation’s charities. The primary reason we give is not for the tax benefits, but rather because we want to help those in need. The operative words are “in need.” We want to be magnanimous, but we don’t want to be taken advantage of.
We want our donations to go those who truly need help.
Americans across the political spectrum don’t like it when someone takes advantage of the system and secures financial support by lying about an illness, faking a disability or obtaining benefits to which they are not entitled. They don’t like “freeholaders.”
Republicans, led by Ronald Regan, for years employed the trope of the “welfare queen” to attack the welfare system and all who received Aid to Families with Dependent Children. The trope was not confined to Republicans. Joe Biden used the imagery when advocating for reform legislation in 1988 in the Newark newspaper: “We are all too familiar with the stories of welfare mothers driving luxury cars and leading lifestyles that mirror the rich and famous,” he wrote. “Whether they are exaggerated or not, these stories underlie a broad social concern that the welfare system has broken down—that it only parcels out welfare checks and does nothing to help the poor find productive jobs.” And let us not forget that Bill Clinton solidified his second term by “ending welfare as we know it” by joining Republicans and instituting a five-year lifetime limit on the use of federal funds to assist any particular family.
Even though welfare was never a fiscal drain as it never amounted to more than 1 percent of the federal budget and the number of actual welfare cheats was always very low, the issue resonated with many voters who were angry that some individuals who could and should be working for a living were getting something for nothing.
The provision of day care service and the reduction in student college debt are two areas that could present similar dilemmas for voters. It can cost a husband and wife working at two jobs upwards of $40,000 to keep their two children in highquality day care. If they do it on a combined salary of $120,000 in all likelihood they will be unable to save enough for a down payment on a house. How will they respond to a couple down the road earning $65,000 who will receive free day-care services at the same center their children are attending?
The Biden administration appears to cognizant of this issue as the program they have proposed would pay for all child care for the neediest families Those who earn 1.5 times their state median income ($82,500 in New Jersey) would pay no more than 7% of their income for child care. A similar kind of approach would be needed in deciding whose student loans will be reduced and whose will not?
No matter what criteria are used there will be a lot of folks who feel they have been treated unfairly and will be unhappy. For this reason, whenever possible, programs providing additional benefits should employ a sliding scale or other targeting mechanisms to allocate benefits.