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New Volume by W&L Historian Examines Tax and Spend Politics

Molly Michelmore, assistant professor of history at Washington and Lee University, hopes that her new book (University of Pennsylvania Press, February 2012) will not only help readers to think more clearly about taxes and government spending but also to re-think their ideas about what exactly constitutes welfare.

Michelmore traces the development of taxing and spending policy, two areas not usually examined together, from the New Deal of the 1930s through the Reagan revolution of the 1980s, providing a new interpretation of post-New Deal American liberalism in the process.

According to one review, “This most important book has the potential to transform how we think about the historical origins of the current crisis in the welfare state.” Another review declared that the book “shows why many Americans have come to hate government but continue to demand the security it provides.”

“Nobody ever talked about how taxes pay for the welfare state,” said Michelmore, “but it seemed that taxing policy and spending policy should be examined together. It’s impossible to talk about any kind of American political debate without thinking about how you’re going to pay for the things that people want.”

Drawing archival evidence from Congress, the White House, federal agencies and grassroots organizations, Michelmore shows how Democrats –even at the height of their power in the mid-20th century—adopted a political program that essentially hid government benefits from the people receiving those benefits.

“One of the things I point out in my book is that there has been a timidity on the part of liberals, including Roosevelt, the New Dealers, Harry Truman, Lyndon Johnson and John F. Kennedy, to really embrace the idea that the state can be good,” said Michelmore. “Instead, they have done their best to obscure what it is that they’ve achieved. As a result, few Americans realize that, if you look beyond the obvious programs that we call welfare, the middle class is quite dependent on federal assistance. It’s not simply the poor.

“But we have this erroneous idea as a nation that welfare is an illegitimate give-away program that taxes hard-working people in order to give money to irresponsible people who don’t want to work, can’t take care of themselves and make bad choices.”

Michelmore cited Social Security and Medicare for retirees, as well as home ownership tax programs such as the home mortgage tax deduction and the deduction for local property taxes, as well as tax breaks for child care and health insurance, as examples of this “hidden middle-class welfare state.”  But although these benefits go mostly to the white, salaried, middle class, these are exactly the people most like to feel like the victims, rather than the beneficiaries, of federal welfare policy.  “When you don’t have to pay the government $2,000 in federal income tax because you own a home, it doesn’t feel like you’re getting $2,000 from the government. It feels like something you deserve as opposed to something the state is doing for you.”

By hiding these benefits, liberals actually set the stage for the rise of the Republican right in the last decades of the 20th century. Republicans could adopt an anti-state attitude because most people didn’t feel the government was doing anything for them. “Because a lot of the liberals’ accomplishments were hidden and felt very different from what people define as welfare, the term has become a regular punching bag for people trying to score political points. Even when you look at left-wing populist discourse, it attacks welfare for corporations,” said Michelmore.

On tax policy, Michelmore said that the idea of “tax and spend” liberals is largely fiction, and that from the 1930s through the 1960s, the so-called “golden age of American liberalism,” liberals in fact cut taxes rather than raising them. She then pointed out that the Republicans’ anti-state idea of “starving the beast” articulated in the early 1980s — if you cut off the tax stream you can ultimately shrink the state — hasn’t happened either. “In fact welfare programs, largely for the middle class, have grown during periods of so-called conservative governance. So what you have is a period of tax-cut-and-spend liberalism giving way to a period of tax-cut-and-spend conservatism in the 1980s,” she said.

“One of the stories I’m trying to tell is the way in which the American Right manages to claim this mantle of defenders of the taxpayers, how that happened and what its consequences have been,” she added. “A lot of people in the 20 to 30 age demographic today don’t feel as if they’re getting anything from the state, even if they are. They feel that they are being sucked dry and getting nothing back.”

In her book, Michelmore proposes shedding more light on what it is that the government can do and has historically done. “We need to think more clearly about connecting what we pay and what we get from government, because the invisible financing of certain benefits has made politics really difficult,” she said. “For example, a few years ago it was fairly common to see people at Tea Party rallies arguing to ‘get the government’s hands off my Medicare.’ It doesn’t make any sense since Medicare is a government program and wouldn’t exist without the government.

“Connecting taxes and spending more clearly by throwing some sunshine on these issues would help us make more informed and coherent policy choices about what we do want from government,” she concluded.

Tax and Spend: The Welfare State, Tax Politics, and the Limits of American Liberalism will be available at the University Bookstore or find it on their website at http://bookstore.wlu.edu

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