What the Fight Over Means Testing Is Really About

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J. Scott Applewhite/AP Images

Representative Ilhan Omar, Senator Bernie Sanders, and Representative Pramila Jayapal listen as Representative Alexandria Ocasio-Cortez joins them in a call for legislation to cancel all student debt in Washington. 

On a sun-drenched afternoon, at a press conference outside a Senate office building, Senator Bernie Sanders and Representative Ilhan Omar discussed their companion bills to cancel all student debt in the United States. Unlike the plan put forward by Senator Elizabeth Warren, which limits debt cancellation for those earning $100,000 and phases it out entirely at $250,000, the Sanders/Omar plan would apply to everyone. When asked why, Sanders offered a simple answer: “I happen to believe in universality.”

Sanders, who has thus far refrained from criticizing Warren, kept his remarks positive. But Omar's office contrasted Warren’s proposal unfavorably with hers, calling it “a complicated means-tested plan to keep out a doctor or lawyer who might be earning a good living.”

“Means-tested” is clearly used unflatteringly here, because it has become a pejorative shorthand to describe and dismiss a certain kind of Democratic politics. As the headline to a 2017 essay by The Week’s Ryan Cooper put it, “The road to hell is paved with means-testing.”

Any test of an individual's financial status can be described as a “means test,” although the practice has largely been used to target aid to the poor, as with food stamps, Medicaid, or welfare benefits. While the practice has obvious merits, some on the left have contended that this is both stigmatizing and creates “poverty traps.”

The limits in Warren's plan don't fit the typical means-testing pattern. Instead of targeting the poor for inclusion, they target better-off households for exclusion. If you believe federal resources are scarce, there's clear policy value in targeting some government services to those deemed most in need. Most industrialized democracies, including the Nordic states, do this in one form or another.

But the U.S. is unusually parsimonious with social services, and the means-testing impulse has often limited access to already sparse benefits. For student debt cancellation, this poses pragmatic problems—won't households just defer income to qualify for payouts?—as well as political ones. Such microsurgeries on the body politic run the risk of puzzling the public and undermining their own goals.

Some challenges can't be laser-targeted away. Imagine the scion of a billionaire—say, the daughter of the current president—toiling in a make-work office job at $35,000 a year while waiting for a trust fund payout. She would qualify for debt relief under the Warren plan, thwarting its primary goal and triggering political fallout.

The practice can be taken to absurd extremes. Kamala Harris's widely (and rightly) mocked variant of the Warren/Sanders plans, designed to promote black entrepreneurship, would cancel student debt—but only $20,000—for “Pell grant recipients who start a business that operates for three years in disadvantaged communities.”

The level of detail was so elaborate that it gave rise to the hysterical “Oddly Specific Kamala Harris Policy Generator,” where you can hear about her “White House internship program for Atheists who open a school that operates for 17 years in the Bronx.” And it’s not just absurd, it’s also easy to game—in Harris’s case, primarily by outside business owners who exploit disadvantaged communities and extract their wealth.

Means testing, whatever your opinions of the concept, has given rise to a kind of thinking—call it “son of means testing,” or simply income testing—that has dominated Democratic politics for decades. Now, a new cohort of left activists, writers, and politicians are challenging that thinking. They argue that the practice of dividing the “deserving” from the “undeserving” robs Democratic programs of comprehensibility, manageability, and the public understanding that builds broad support.

By No Means Necessary

Lately, the Trump family has loomed large in this intraparty Democratic debate. In a 2016 debate, Hillary Clinton mocked Sanders's plan to provide tuition-free public higher education to all Americans by saying, “I don't want to pay to put Donald Trump's kids through college.”

Sanders seemed to allude to those words in his recent student debt presentation when he said, “If Donald Trump wants to send his grandchildren to public school, he has the right to do that. Our response to making sure that this does not benefit the wealthy is in other areas where we are going to demand the wealthy and other corporations start paying their fair share in taxes.”

That's the universalist, anti-income-testing philosophy in a nutshell: Public goods and services should be available to everyone. If you don't want the rich to get a free ride, don't test them. Tax them.

Taxes, of course, are difficult to enact through our polarized politics. But taxes on the wealthy remain popular, according to polls, while it can be difficult to build much enthusiasm for complex programs that exclude large portions of the population.

The income-testing mindset has its supporters, of course. Many find themselves characterized as “neoliberals” by left critics, a term that's often dismissed as an empty insult. But the ideology has its adherents, and even a manifesto, written by Washington Monthly’s Charles Peters in the 1980s.

Peters condemns the idea that certain public resources should be made available to all, mocking that principle as “The More the Merrier.” He singles out Social Security, complaining that “benefits are paid to rich and poor alike,” and “a lot of money is wasted on people who don't need it.” His grand neoliberal plan would replace Social Security, welfare, veterans pensions, and unemployment insurance. “We want to eliminate duplication,” he declared, “and apply a means test to these programs … They would all be one insurance program against need.”

The Presidents

While no Democrat has proposed anything that dramatic, the moral language of means testing, implying that some people have it just a little too easy, has been visible in Democratic rhetoric ever since. A February 1993 New York Times article about Social Security chronicled the rise of this new approach. “The new ethos of Washington is supposed to be ‘shared sacrifice,’” it declared.

The article describes newly inaugurated President Bill Clinton's plan to freeze Social Security benefits for a year, as well as grassroots opposition to it. “Selling sacrifice to the elderly, and the politicians who represent them, may be the first crucial test of President Clinton's deficit-reduction plan,” wrote Robin Toner.

“Sacrifice” was one means-testing code word. “Responsibility” was another. The first section of Clinton's 1993 health care reform bill was entitled “Universal Coverage and Individual Responsibility.”

A 1997 Los Angeles Times article was headlined “Clinton Now Favors Medicare Means-Testing.” It outlined Clinton’s support for income-based premium hikes for Medicare, which it described as a policy reversal. Clinton objected to that characterization, saying, “I have never been opposed to means-testing Medicare.”

Reversal or not, the move offended House Minority Leader Richard Gephardt, whose spokesperson said it “would be an erosion of the most fundamental principle of Medicare, a social insurance program … where everybody pays and everybody gets.” (Or, as some Sanders supporters say of his single-payer program, #EverybodyInNobodyOut.)

The next Democratic president continued the tradition. As the contours of the Affordable Care Act took shape during the 2008 Democratic primaries, the Clinton-era mantras made a comeback, with talk of “shared responsibility” and the assertion that people who didn't purchase health insurance were “free riders.” Rather than control costs the way many other nations have, with government price controls, Democrats embraced free-market principles and the idea that individuals (often described as health care “consumers”) needed to have “skin in the game.”

Barack Obama campaigned against the idea of limiting Social Security benefits by income. Once in office, however, Obama adopted the “shared sacrifice” approach of his Democratic predecessor, appointing two means-testing advocates as chairs for a “deficit commission” whose mandate included Medicare and Social Security.

By putting Social Security reductions on the table, Obama may have contributed to a 20-point plunge between 2006 and 2010 in voters’ trust for Democrats on the issue. That, in turn, likely contributed to Democrats’ loss of the House that year. The swing away from Democrats was especially dramatic among older voters.

Nevertheless, Obama doubled down on this strategy in 2011, signaling his openness to means-testing Medicare even more, and to raising its eligibility age. Polling that year showed that voters, battered by decades of stagnant wages, high unemployment, and soaring inequality, believed that the wealthy (and not they) needed to assume a greater share of the “sacrifice.”

Obama retreated from these positions in later years, but they left their political mark. In 2016, the blunt (if disingenuous) declarations of Donald Trump (“We’re going to save your Social Security without killing it like so many people want to do,” Trump said) had resonance because of the previous president’s openness to cuts.

The Anthropology of the Testing Class

One source of the anti-income-testing anger is the fact that someone must decide who is in “need” and who isn't. This gives rise to friction, resentment, and possible failures of judgment.

For example, it is a widely held belief among Democratic health economists that it's reasonable for households to spend up to 10 percent of their income on health insurance premiums. Many left critics, however, see that figure as an onerous burden on working families—one that is compounded by exorbitant deductibles and copayments. They (I include myself among them) consider this a major political and policy flaw in the Affordable Care Act.

The most notorious example, however, might be the Obama administration's implementation of HAMP, the Home Affordable Modification Program. From the outset, officials were loath to “rescue the unscrupulous or irresponsible,” as Obama put it when he announced the program in February 2009. Haunted by the image of CNBC’s Rick Santelli ranting about “the losers' mortgages,” Obama’s Treasury Department designed a complex series of calculations to allow only “deserving” borrowers to qualify.

Because eligibility was based on current income, pay stubs rapidly went out of date, allowing the private mortgage companies through which the program was administered to deny applicants. Paperwork was outsourced to low-wage countries for processing, resulting in loss and even destruction of documents. The administration's constant tweaks, driven by the fear that someone, somewhere would wrongly receive benefits, made HAMP unmanageable.

The result was failure. A program Obama promised would help four million borrowers provided ongoing support to less than one million. According to the Special Inspector General for the Troubled Asset Relief Program (SIGTARP), 70 percent of homeowners who applied for the program were turned down.HAMP harmed millions by dashing their hopes of help or squeezing them for a few more payments before foreclosure.

The obsession with excluding the “undeserving” led tonearly 10 million foreclosures and failed to deal with a debt overhang that stunted economic recovery for years after the crisis. It also wounded the entire concept of activist government, by failing far more borrowers than it helped in a time of crisis.

The Obama administration earmarked $75 billion for HAMP and only used $10 billion. The money was available for a stronger program, with broader eligibility guidelines and a speedier distribution of benefits. That might have generated a few bad headlines about borrowers who didn’t “deserve” the help. But the benefits to the overall economy would have dwarfed those complaints.

That raises the question that undergirds much of the left's opposition to this testing approach: Who tests the testers? Who decides whether they're doing a good job? Why is judging and classifying people a worthy activity? And who decides who's worthy of conducting it?

To be fair, sometimes income testing is appropriate. In those cases, someone has to make the calculations. But the “son of means testing” approach is based on an implicit moral code that divides the population into those who warrant help and those who only want a “free ride.” Every added complication increases the likelihood that things will go wrong—and when social policy is wrong, people suffer.

Who's In and Who's Out

Nobody denies that there are times when it is necessary to target resources where need is greatest. That can be seen in progressive programs like environmental justice policies that ensure frontline communities receive the most from efforts to mitigate the climate crisis, or Representative James Clyburn's “10-20-30” anti-poverty formula, which targets at least 10 percent of investments where 20 percent of the population has been in poverty for at least 30 years. These are defensible policy frameworks.

But means testing has evolved from a tool into a conceit. It has become a worldview that says policymakers can technocratically sort every American citizen into a mathematical unit, deserving of only the proper amount of benefit. To the left, this conceit represents the political, perceptual, and policy failures of the Democratic establishment.

Means-testers argue that their moderation will win swing voters, while universalists say their policies will energize the base and win the working class. The latter group also claims that the divisiveness of means testing hurts Democrats politically. They argue that it's too easy for means-tested programs to be gutted by cynical right-wing politicians, while universal programs create broad constituencies. I find the pragmatic arguments for universalist policies more compelling, provided they're presented clearly and directly.

The language of the means-testing culture—“Shared sacrifice.” “Individual responsibility.” “Skin in the game.”—seems to stigmatize the new economy's losers. With soaring inequality, those “losers” may include the vast majority of voters, which means these terms can trigger deep resentment and political blowback. By contrast, opponents are more likely to believe that access to certain goods and services—including medical treatment, pharmaceuticals, and education—is a human right, and should be freely available to everyone.

Not all of those who criticize means testing are opposed to it in practice. As a symbol, however, it has come to represent an elite-oriented, risk-prone, and politically unpopular mode of governance. The controversy around it has become a proxy struggle for the future of the progressive movement, the fight for a society where everybody is in and nobody is out.