The Stupidity of Means Testing

Today on TAP: Democrats particularly need to resist this Manchin ploy.

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Before too long, we will know just what price Joe Manchin will exact for letting Biden have some semblance of his urgently needed program. And as Democrats resist other crippling cuts, they should especially resist Manchin’s latest hobbyhorse, means testing.

The crown jewel of Biden’s March 2020 emergency program was a universal child allowance (technically a refundable credit) that went to all families except roughly the top 2 percent. If you had a relationship with the IRS, you got a check. You did not have to establish eligibility. This is how government programs should work.

Because of budget pressures, Biden has agreed to only a one-year extension of the child allowance, rather than making it permanent. We can fight that battle another day, if Democrats can manage to hold Congress. But adding a means test—Manchin has proposed a household income cap as low as $60,000—would be a travesty.

Our most comprehensive, best-run, and best-supported programs have no means tests. That includes above all Social Security and Medicare. It also includes public education. And Central Park.

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But what about the risk that some rich person, who doesn’t need the benefits, gets some aid? That’s why we have a progressive income tax.

The cleanest solution is to make the benefit universal, and then tax back the portion that goes to the rich, either by making the benefit taxable or through general revenue. If this is the case with public kindergartens, it should also be the rule for pre-K and child care and elder care—universal, public, free, and tax-supported.

Once you get into the slippery slope of means tests, you get into the political problem of programs for the poor being threadbare, intrusive, and unpopular. We also get inevitable “cliff effects,” where you lose the benefit as your income rises.

But what about necessary targeting? Look deeper and you realize that in most cases of income-targeting, we have means-tested programs like Medicaid only because we lacked the votes to enact universal ones.

The single most important reason not to means-test is that universal programs demonstrate that social outlays are for the middle class as well as the poor—and that’s a core appeal of the Democratic Party.

Biden is expanding social investment, something long overdue. If he increases public outlay with one hand and means-tests it with the other, we undercut the broad public support.

Manchin is doing damage enough with his demands for cuts in outlays. Adding means testing would be even worse.

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