Today's Plum Line post concerns the plan to eliminate the tax benefit of 529 plans, which the Obama administration proposed and then withdrew in the face of opposition from both Republicans and Democrats:
The Republicans who are crowing about the White House's retreat ought to remind themselves that this is yet another illustration of a dynamic they often bemoan: that it's easy to give people a government benefit, but much harder to take it away once it's in place. And while they sneer in disgust at the moochers who get food stamps or Medicaid, the program they're now celebrating is a government giveaway, too, just one that is mostly given away to people who don't need it.
Here's the real lesson from this whole affair: If you want to create a politically bulletproof government benefit, like the 529 program or the mortgage interest deduction (which costs the government about $70 billion a year), just make sure it's technically open to anyone, but that the chief beneficiaries will be people who are doing well. They'll squawk if it ever gets threatened, and it's an absolute certainty that their representatives in Congress-Democrat and Republican alike-will hear them loud and clear.
The lesson of this retreat is clear: don't mess with the government benefits that the upper middle class gets. They're wealthy enough that Congress cares about them, and numerous enough that they constitute a significant voting bloc.
