Romney’s Disturbing Ignorance About the American Economy

The left has been going wild over Mitt Romney’s “47%” comment, and for good reason. What they may not realize is that a fair number of people on the free-market right aren’t too happy with it either, because it shows shocking ignorance of how the American economy works.

Steve Chapman has a takedown of Mitt Romney today which describes the problem pretty well. The angry folks on the right love to use that 47% figure to conjure up visions of lazy people on welfare stealing from us hard-working folks. But all that 47% figure means is that a little less than half of all Americans are not a significant presence in the workforce: Americans such as our children, our spouses who stay home to take care of those children, and our parents who took care of us and are now retired.

The latter group is especially huge:

From where has the growth in “dependency” come? Mainly Social Security and Medicare. Since 1990, the number of people getting Social Security benefits has risen by more than a third. That’s not because the government has suddenly enlarged the program in an effort to undermine self-reliance. It’s because there are more old people.

The advantage of Social Security, for those worried about soul-sapping dependency, is that it rewards work. It’s an earned benefit. The alleged moochers worked when younger so they could take it easy in old age. That’s how things are supposed to work.

In essence, these people are living off of their savings. Or else they’re living on credit, which is not a bad thing if done wisely, with the intent of returning to the workforce, or of joining the workforce, as is the case with students, who make up another big segment of the 47%. Apparently Mitt Romney thinks that someone who takes off a year or two to go to school is mooching off the hard work of others, when they’re really investing in their own ability to do hard work.

There’s also this:

Romney may not realize that one reason many low-income Americans pay no federal income taxes is the Earned Income Tax Credit, which covers some 27 million people, up from 19 million in 2000.

The program does not subsidize sloth but labor, since it’s available almost exclusively to adults who are employed, particularly those with children. It was conceived to give the able-bodied poor greater incentives to enter the labor force, and it works.

Easing the tax burden on those who have the least was not always anathema to conservatives. In signing the historic 1986 tax reform, President Ronald Reagan expressed pride that “millions of the working poor will be dropped from the tax rolls altogether.”

Besides, low-income workers are subject to federal payroll taxes, which are not trivial.

Many people on EITC will eventually get raises or move into better jobs that pay more, and they they will begin paying income tax. So will those students, and so will the parents who took time off to care for their children. So will the temporarily unemployed, and the temporarily disabled, all of whom are in Romney’s 47%. Just because someone isn’t paying income tax right now doesn’t mean they will go their whole lives that way.

Read the whole thing.