Now and then a conservative will say that if only the government would give us back our tax money we could care for the poor more efficiently than it could. Christians, specifically, point out that biblical commands to care for the poor are given to individuals, not governments. (I believe that statement is wrong in several ways, but that's not my concern in this post.) I think this idea can be soundly dismissed by looking at what we actually do with our charitable donations.
A Center on Philanthropy study determined that 30% ($77.3 billion of the total $252.6 billion) of our charitable donations go to meet the needs of the poor. Here is how it breaks out by charity type:
The study broke out all giving into the categories you see in the chart. Then it determined what portion of each category was directed toward the poor. All giving in the "helps meet basic needs" category was focused on the poor. The researchers were unable to determine what percentage of giving to the arts was focused on the poor. The rest of the categories ranged from 18% to 25%.
So when we have money to give to charity we give it for the benefit of the poor 30% of the time. How do we direct most of our charitable giving? If you make $200,000 or less per year, which is 97.8% of the population, it is overwhelmingly to religious operations. If you make over $200,000, it is split more evenly between arts, education, health, and religious operations.
Some more facts. Medicaid spending in 2009 amounted to $373.9 billion. Spending on various safety net programs (EIC tax credit, cash payments like SSI and unemployment insurance, in-kind assistance like food stamps and housing, child-care, and energy assistance, etc.) totaled $482 billion in 2010. This gives us a total of $855.9 billion, or 6.5% of GDP. Charitable contributions have averaged 2% of GDP since the 1990s (figure from the CoP study). This means that in order to cover the costs of Medicaid and the various safety net programs charitable giving would have to increase fourfold to 8.5% of GDP, assuming we redirect 100% of our tax savings into private organizations that perform equivalent services.
Do you think that is likely - especially given that we only direct 30% of our charitable giving to the poor? This also does not take into account the losses through administrative costs that would result from moving from government programs with strong buying and organizational power into multiple private organizations. There's just no way. Claiming that it would work is utopian in the extreme, which is odd since conservatives are supposed to be the anti-utopians.
If the argument based on human nature doesn't convince you then how about one from history? In 2006 Obama proposed some changes to the allowable deductions for charitable giving. In response, the Center on Philanthropy released a study examining the effect the change in tax policy could have on giving. They determined that changes in the overall economy and/or in personal income had a greater effect on levels of charitable giving than did changes in tax rates (which, presumably, would be what would change if the federal government dropped Medicaid and the safety net programs).
When you give people money back through tax cuts they will spend it in any number of ways. The best that could be hoped for is that government could devise some incentive (though income tax deductions, perhaps) that would redirect the money to benefit the poor. I'm certain, though, that most of it would be spent in some other way. But even if some incentive structure could be devised, why bother? Spending it through the present system of taxation is at least as efficient as devising some complex incentive program to make sure the money is still being spent to help the disadvantaged.
As I was putting the finishing touches on this post, The Lead posted a link to a study (pdf) showing that faith-based initiatives do not actually increase faith-based groups' involvement in social ministries. (Faith-based initiatives, you recall, were attempts to prove that faith-based institutions could serve as alternatives to government run safety net programs.) This seems to show that private organizations are limited in their effectiveness as providers of safety net services.
I have no doubt that most conservatives, particularly religious conservatives, who want to dismantle the welfare state and replace it with networks of private institutions do indeed want to effectively help the poor and disadvantaged. Nevertheless, the evidence against this idea is overwhelming.
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