Middle class moochers?

How tax exemptions and subsidies help pay for the American lifestyle.

Sarah Gardner: One of the biggest issues that seems to divide Republicans and Democrats is government -- how big should it be, what its purpose is, and just how much we should rely on it for our well-being. Well, Michael Grunwald's just written a very thought-provoking story for Time magazine that digs into all the many ways in which government subsidizes our lives -- both Democrats and Republicans. A lot of them that go unnoticed. Michael, thanks for joining us as you take a reporting break from covering the Democratic Convention.

Michael Grunwald: Thanks so much for having me.

Gardner: So Michael, what are you doing at the convention?

Grunwald: I'm covering it just like the other 15,000 reporters here.

Gardner: You decided to tackle this story partly by looking at all the things that are subsidized in your own life, you made it rather personal. So paint a picture for us.

Grunwald: Well, I had just written a book about the stimulus and had been sort of stunned by the way that it seemed perfectly logical to people that $800 billion would be completely wasted on people that had nothing to do with them. And I did realize that hey, government is in all of our lives. It's not like this is a maker and taker world. We're all makers and we're all takers. That my housing is subsidized because I have a mortgage interest deduction. That my savings are subsidized because the 401(k) has a tax exemption. That just about every part of our lives is subsidized in some way.

Gardner: So in your reporting was there any subsidy that actually really struck you as outrageous or really shocked you ?

Grunwald: Well I've banged my spoon on my high chair about farm subsidies for years. I think there are about $700 billion in spending that we do that's actually environmentally destructive, that's pretty crazy. And the mortgage deduction, in particular, which again it benefits homeowners over renters; it benefits wealthy homeowners over less wealthy homeowners. That's another one where it may have run its course.

Gardner: So Michael, in the end, what do you want both Republicans and Democrats to take away from your reporting?

Grunwald: It's interesting. There are some critiques from the left and the right that are pretty powerful and true. I think the right has made this case for years that government does weigh more than it needs to and I think that's really true. I live in Miami beach. Does government need to dump sand in South Beach so that tourists and my family can enjoy it more? I'm not sure about that. Certainly, does it need to be subsidizing farmers? Maybe not. At the same time, liberals have made the case that hey, we rely on government a lot more than we think. I think that's true, too. That government really does support us in many ways -- not just outrageous ways, but ways that are part of our everyday lives. I think if both sides could maybe recognize a little bit more that we are makers and we are takers. And the fact that the government does support and maybe it does support us more than we need.

Gardner: Michael Grunwald is the Time magazine's senior national correspondent and the author of "The New New Deal: The Hidden Story of Change in the Obama Era." Michael, thanks a lot.

Grunwald: Thanks so much for having me.

About the author

Sarah Gardner is a reporter on the Marketplace sustainability desk covering sustainability news spots and features.
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Interviewee: "And the mortgage deduction, in particular, which again it benefits homeowners over renters;"
Small landlords (renting is not primary income activity) deduct mortgage and property tax from Schedule E income. Therefore, deductions indirectly subsidize the rental cost to renter. (Large landlords 'active activity' also deduct mortgage and tax)
Unless you establish a separate business which you then hire, you can't deduct your labor for work on your Sched E property. (And might that type of arrangement arouse IRS suspicion?)

"it benefits wealthy homeowners over less wealthy homeowners."
True of high cost mortgages, whether occupant is "owner" or renter.

"Ending subsidies to farmers" cannot be done wholesale. This all-or-nothing approach is what gets us into trouble, and people who say stuff like this have no obvious grasp on reality. I am incensed enough to ask in the most blunt possible terms, "Where does this person get this information? Rush Limbaugh?"

There are 'farming conglomerates' where ending subsidies makes sense; yet ending the subsidies to small farmers is complete insanity. It's through the efforts of small farmers that we have agricultural diversity. While single-solution outfits like Wal*Mart push producers into single (and tasteless!) varietals of food, these smaller producers are pursuing the craft of keeping agricultural diversity alive.

Let's have some sanity instead of just waving the flag of "Entitlement Cuts".

"That my housing is subsidized because I have a mortgage interest deduction."

No, Mike.. the government taking less of my money is NOT a subsidy. The government PAYING me money is a subsidy.

No, james_b. The government taking taxpayers' money to pay another taxpayer's capital gains subsidy IS a subsidy. It's also pure classwar by government edict.

Are you disagreeing with his point (that either option is a government benefit) or only with the way he uses the word "subsidy"?

While it may be true that some government spending is inefficient, one of the examples that your guest Michael Grunwald suggested would not be one of them. Miami beach nourishment cost $11 Million, but supports a tourist-driven economic engine worth well over $1 Billion annually. Does Mr. Grunwald believe that level of tourism would continue when the beaches are washed away by natural erosion? Just because one is ignorant of the role that government provides doesn’t mean that the services are not beneficial.

And according to tea scripture, the service is valueless when performed by so-called 'union thugs', but productive when performed by a privately owned business.
And the service is the absolutely *bestest* of Great Leaps Forward if a Bold Innovative Job Creating Entrepreneur Innovates a way to ship the jobs to a Freedom and Liberty tea paradise country such as the communist People's Republic of China.

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