Defining what a 'closet socialist' is


Libertarians may well be right when they argue that government programs which rely on taxes collected from one group of people to provide services to another is a form of socialistic redistribution. Perhaps such redistribution goes way beyond what some of the Founding Fathers meant by “providing for the general welfare” as a purpose of government. Maybe, all Federal programs like those that came out of the New Deal and the Great Society violate the reserved powers clause of the Constitution and should be declared unconstitutional.

The fact of the matter, though, is that up until now, constitutionally empowered courts have ruled clearly that re-distributional programs like Social Security and Medicare are not unconstitutional. If they were alive today, James Madison might bring his “strict construction” arguments forward to support the libertarians’ opposition to redistribution and Alexander Hamilton might disagree by raising arguments about “implied powers.” But for the record, right now, the law of the land, decided in accordance with the Constitution, is on the side of Hamilton, not Madison.

Once tax policy is set with regard to exemptions, deductions, subsidies, loopholes and credits, and taxes are actually collected, the money is always redistributed. All taxes.all of the time, and it does not make any difference what kind of taxes: income, payroll, sales, property, real estate, value-added, progressive, regressive or flat you name it. In any kind of society with a tax system, including mixed but self-designated “capitalist” societies like ours, all taxes are redistributed. The only way to avoid this fact is live in a country with no taxes at all. I know of none.

Ezra Klein gives these examples of redistribution: through the mortgage deduction, renters redistribute to home owners. People who buy health insurance on their own redistribute to employers who get a tax deduction to provide health insurance to their employees. A company that borrows money redistributes to companies which get reductions on their interest when they rely on equity funding.

Likewise, people without children of school age redistribute their money to people who have children in school. People who live on high ground help subsidize the flood insurance premiums of others who live in flood-prone areas. Fisheries and farmers receive government subsidies paid for by other tax payers whose livelihood is also subject to the vagaries of weather but receive no subsidies.

Citizens in blue states who pay the highest income taxes redistribute to ten red states with the highest percentage of filers who pay no income tax at all. Writer Michael Moran has observed the tremendous irony of this fact: “In effect, supposedly indolent, ‘tax and spend liberals” actually subsidize the individualistic, pure, and hard-working lifestyle of our conservative countrymen.” In election after election, the Red State “takers,” like many in this county, have, as Italians put it: “Spit in the dish from which they eat.”

The question is not whether taxes will be redistributed or not. The question is to whom and how much. Ezra Klein thinks that under President Obama’s policies, redistribution goes more from the rich to the poor and from the healthy to the sick. Under all currently proposed Republican plans, redistribution goes from the poor and middle class to the rich, and from all tax payers to defense contractors.

And if the Republicans carry out their desire to privatize Medicare and Social Security, the elderly would pay more health care costs, insurance companies less. Wall Street would get a windfall of new money now going into the Social Security Trust Fund (which has not missed an inflation-adjusted payment in 79 years). Brokers would then play with individual retirement accounts of others in the stock market (which crushed 401ks, and most damagingly, the income of retirees, when it took a $1.2 trillion loss in market value just six short years ago). Oh, and Paul Ryan calls for the government to insure these investments so that they would never be less than the original principal plus inflation.a re-distribution from the 52% who are non-investors to Wall Street and to the 48% who are investors.

People are what they do, not what they say in generalized platitudes like “End big government,” and “Cut spending.” Libertarians would be more credible if they refused to accept socialist benefits, and stood on platforms that explicitly called for the elimination of the very re-distributional, that is, “socialist” programs from which they shamelessly benefit.

So what can libertarians do? One thing would be to bring cases to the courts to test this whole idea of redistribution, the way opponents of what is derisively called “Obamacare” have tried to do, (unsuccessfully, let it be noted). A second is get laws passed to make these programs illegal, as the House did around 50 times on Obamacare so far (unsuccessfully, let it be noted). A third thing is to run candidates who promise to direct their best efforts toward whatever is legally possible to eliminate all re-distributional Federal programs including those in which they are recipients.

Where might libertarians start? Well, Medicaid appears to be an easy choice to get all those welfare “takers” until of course the self-styled “makers” are reminded that Medicaid pays for 65% or more of resident care in nursing homes including, most likely, the care of many of their own parents. One wonders why those who are repelled by socialism don’t get off welfare themselves, bring Mom and Dad home and take care of them themselves. Instead, all they do is berate the “nanny state” that suckles them.

Next, take a whack at Medicare and Social Security. Both are re-distributional socialist programs run by the government with tax dollars. The average Social Security and Medicare recipient receives benefits worth more than the sum of their own contributions and depend on the contributions of younger current workers for the difference. These programs make up 43% of the Federal budget and are growing rapidly compared to the “safety net” programs which they oppose even though they now make up 12% and will likely stabilize after the recession. Libertarians should follow their rhetoric and get rid of Medicare and Social Security (their very titles should make true blue libertarians recoil!).

I recall hearing a hospital worker wearing an “I Built It” button in a supermarket once upbraiding folks buying groceries with food stamps. “They should have to make it the way I do, through hard work and without government aid; government creates dependency not jobs,” he said. This, mind you, was a gentleman who would not be able to draw his next paycheck if all government funding for our over-priced healthcare stopped tomorrow. About 50% of hospital revenues would disappear without government funds. As one expert put it: “Without government revenues, healthcare, as we know it, would end.” So would this gentleman’s non-job creating government subsidized paycheck.

This employee reminded me of an out-of-town physician I once knew who fancied himself to be a totally self-reliant entrepreneur. He constantly criticized others who, “unlike him,” were the recipients of government largesse. He seemed to have forgotten that he would not be practicing medicine except for federal loan programs to attend federally subsided medical schools, employment in a heavily governmentally subsidized healthcare industry, salaries and benefits partially paid for by behemoth government programs like Medicare and Medicaid, the availability of buildings partially paid for with government funds, and grants to do his governmentally funded research through which he made extra money on the side.

Redistribution is and always has been as American as apple pie even though it is as Russian as vodka and borscht and as Chinese as sticky cake and jiu. Redistribution is indeed “red.” It is also “red, white and blue.” And so are socialist, government- financed-and-run programs like Medicare and Social Security. Maybe they shouldn’t bebut undeniably, they are. So if you have ever been on the receiving end of any re-distributional government benefits and do not oppose and reject benefits from any and all such re-distributional government programs, bite the bullet: “You are a closet socialist.”

Mannello is a former hospital executive and business consultant who resides in Williamsport.