The misguided media infatuation with targeted aid

The frequency with which means-testing is upheld as the responsible and moral policy position by the mainstream press is a depressing affair. Perhaps no more significant example is found than in the recent flurry of editorials denouncing a bill passed by the House of Representatives to send $2,000 stimulus checks to an overwhelming percentage of Americans. Not only are these articles soured by a rather distasteful ‘let them eat cake’ veneer, they truck in a poor understanding of social policy fundamentals.

It is not that the Washington Post and Bloomberg Editorial Boards get the argument in favor of means-testing wrong. They correctly point out that the current legislation could benefit those who we don’t think of as currently needing help (although, this is likely overstated). They reasonably conclude, therefore, that we should forgo this bill and instead pursue ‘targeted’ aid at those who are truly in need.

This is the standard argument in favor of selective, over universal, approaches. In absolute spending terms, it is cheaper and more efficient to extend benefits to only persons who are deemed sufficiently needy. A near-universal benefit, like the proposal to send $2,000 checks to the mass of the U.S. population, is held up as wasteful because some affluent individuals, who clearly don’t require any assistance, will receive it.

To be sure, this argument is a mainstay in American political discourse. It was the same claim used by Democratic primary contenders like Pete Buttigieg and Amy Klobuchar to attack the universal higher education programs championed by Bernie Sanders and Elizabeth Warren. “Taxpayers shouldn’t have to fund college for rich kids!” was a common refrain during the primary.

What is so tiresome about the media adoration for means-testing is how the arguments against it are so rarely given due consideration — and there are many. Let us consider just a few of them.

First, means-testing benefits requires substantial bureaucratic oversight. It is not always easy to identify who ‘qualifies’ for a benefit, and so whole new government entities have to be created to process and verify applications or discover eligible recipients. This means that overhead costs begin to pile up in order to actually administer the benefit. Sometimes called the ‘leaky bucket problem’, money that should be going to benefits leaks out into administrative costs — and the more conditions attached to a benefit, the more leakage there will be.

Universal policies, on the other hand, can channel almost all of its funding directly into the program. Because everyone is eligible to receive a universal benefit, there is no need to spend time and money establishing which people meet a given criteria and can access it. Medicare, which is universally available to everyone over 65, is perhaps the most striking example: approximately 98% of every dollar allocated to Medicare goes directly to health services (only 2% to administration). Thus, on the grounds of overhead cost, universal programs demonstrate greater efficiency as they require less administrative resources. Ironically, those in support of means-testing on the ground of ‘small government’ are actually promoting the creation of ever-more government bureaucracy.

The administration problem also comes into play on the recipient’s end. In order for individuals to receive a means-tested benefit, they often have to prove that they meet the eligibility requirements. Students who apply for financial aid know how frustrating, and at times daunting, this process can be. Let us also not forget that those individuals who usually qualify for means-tested assistance are not well positioned to be dealing with Kafkaesque processes that usually accompany government services. For this reason, uptake of means-tested benefits is often less than it could be. A significant number of people who could qualify for means-tested benefits never receive them. Either individuals don’t know they’re eligible for a benefit, they can’t complete the application process, the system incorrectly denies their application, or some combination of these (and other) factors. Our ability to perfectly ‘target’ benefits is less precise than many would think, which leads to the problematic outcome of undercoverage.

Another often-overlooked aspect of means-tested benefits is that it instills an experience of humiliation for recipients. A frequently discussed example of this is the ‘free school meals’ program, where some students pay for their lunch while others are not required to. Surely, this program provides much needed sustenance to millions of students, but it comes with the cost of children internalizing their impoverished status when they walk by the register whilst others stop to pay. Forcing individuals to self-identify as ‘needy’ induces humiliating sensations, and as social psychologists continue to show, a low sense of status has incredibly harmful public health implications for those clustered at the bottom of a social order.

The challenges that arise on the recipient’s end with means-tested benefits do not similarly plague universal programs. If college was universally provided, for instance, there would no longer be the arduous process of applying for financial aid, the division of students into those who ‘pay for college’ and those who receive tuition assistance, and the humiliation that can accompany those in the latter group. Each student would attend university with a shared sense of having the equal right to be there, just as students in K-12 do. A person’s right to a universal benefit comes from their membership in a community, not their lack of economic means.

There are so many more crucial limitations inherent to means-testing that we could explore. But let us conclude by considering perhaps the most significant one. Means-tested programs are difficult to politically justify on a continual basis. The very nature of this welfare model is divisive and anti-solidaristic. Those who pay for the benefit and those who receive it are two different groups of people. For whatever reason(s), it is difficult to convince people that they should continue to fund a program that they do not benefit from or participate in. Thus, a welfare state that is largely comprised of means-tested programs is easily undone by austerity politics. The suggestion that ‘taxpayers’ need relief from paying for all these services that go to those ‘other people’ is politically popular.

Universal programs, on the other hand, have incredible political fortitude because every member of society can attest to the goodness of their existence. Consider Britain’s National Health Service which provides healthcare free at the point of service to all residents. Depending on the year, polling indicates that the NHS is the thing that makes British people most proud to be a Brit. Also, think about how U.S. politicians, even when armed with that ever-so rare bipartisan agreement, seem unable to ever privatize or meaningfully chip away at Social Security or Medicare. The reason why is simple: these programs are so widely enjoyed (by everyone over 65) bestowing them with unassailable political roots.

It is unfortunate that means-testing enjoys the false status of a ‘common-sense’ position. Many people likely confront the idea that benefits should go to only those in need and find it intuitive: it does seem strange to support the government providing things to the wealthy. Yet the absurdity of this objection is quickly made apparent when we begin to work out its full implications. Why should rich people be able to send their kids to public schools? Why should rich people be able to drive on the roads? Why should rich people be able to call on the police and fire services? Shouldn’t we require that they have to buy their own? Why are we as a nation providing these services to them for free at the point of use?

It should hopefully be clear now why we don’t fret over the wealthy already having access to numerous government services: it would be extremely bureaucratic, inefficient, and costly to not run them on a universal basis. And most importantly, we all intuitively understand that because these services are usually financed via progressive taxation, the rich aren’t actually ‘getting them for free’. For those who worry that the rich would get a $2,000 check they don’t need, the solution is simple: finance the checks with progressive taxation! Sending the check to everyone, but making the wealthy pick up the tab, is the best possible outcome. All of the complications associated with means-testing are avoided, and the those who don’t truly require the assistance don’t, in the end, actually receive it.

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Robert Donoghue

Robert Donoghue

PhD Student in Social Policy at the University of Bath