The Submerged State: How Invisible Government Policies are Undermining American Democracy
University of Chicago Press, 2011
The Submerged State: Atlantis? No, a slim and highly readable volume in which Suzanne Mettler describes how certain public policies have become highly resistant to reform and damaging to American democracy. By “submerged state” Mettler means a set of indirect government subsidies and benefits whose size and beneficiaries, indeed whose very existence, is largely invisible to the public. Some types of governmental intervention are highly visible: most citizens are aware that they exist and know something about what they are, how they work, and who benefits from them, for instance, the veterans’ benefits offered by the G.I. Bill. Others are more “submerged”: hidden, either because they are channelled through private delivery organizations or because they come to citizens in the form of indirect subsidies and tax rebates rather than through direct governmental spending. Hence such policies are typically misunderstood and ignored by citizens but defended tenaciously by the private lobbying groups whose interests they serve. These features of the submerged state reduce citizens’ trust in government and inculcate passivity and resentment. They reduce citizens’ ability to form meaningful opinions about acts of governance or to engage in advocacy, thereby damaging the vibrancy of American democracy. Mettler’s concise book examines three parts of the American submerged state—subsidised bank-based student lending, private healthcare, and tax expenditures—and details the Obama administration’s efforts to reform them. It is not a pretty picture. Her assessment is that Obama has successfully eliminated submerged policies only in the field of student lending, and that in other areas he has perpetuated or even expanded the submerged state.
Opinion polling demonstrates that citizens are largely unaware of the existence of the submerged state; consequently they do not give government due credit for its intervention or hold it to account in an informed way. Mettler cites an alarming 2008 poll in which respondents were asked whether they had “ever used a government social program”, and then whether they had used any of a specified list of individual programmes. Clear majorities of the beneficiaries of submerged social policies—including tax deferred savings, lifetime learning tax credits, student loans, and child care tax credits—claimed that they had never used a “government social program”. Certainly this result may in part reflect the wording of the question and a familiar anti-government cultural trope, but Mettler’s analysis points to deep-seated and systematic misperceptions on the part of submerged state beneficiaries (although what the 25% of food stamp recipients who also reported they had “never used a government social program” were thinking is anyone’s guess).
The left should take note. One of the corollaries of Mettler’s book is that the existence of the submerged state acts as a systematic barrier to proper recognition of government intervention. The right has most assiduously promoted tax breaks and private delivery mechanisms that veil government intervention. Perhaps unintentionally, Mettler’s term for such policies, “the submerged state”, sounds exactly the note of chilly state conspiracy that supporters of the right fear. Mettler shows how Republican politicians, along with increasing numbers of Democratic accomplices, have expanded the submerged state because it gives the appearance of privatization and governmental spending restraint, when in reality it represents vast outlays by government in subsidy payments and lost tax revenues. Such outlays are far greater than for many visible social policies, and since the submerged state is hidden from view, politicians have a great deal more knowledge of its true cost than their ordinary supporters do. Mettler’s book is chiefly about the strains this knowledge gap places on democracy, but there is at least an implicit invitation to ponder the partisan paradox presented by the right’s embrace of the sneaky submerged state.
In his A Government Out of Sight: The Mystery of National Authority in Nineteenth-Century America (2009) Brian Balogh argued that progressives should embrace the hidden state because Americans demand it. Mettler’s book provides several reasons to question Balogh’s judgement. The idea of a limited government is an American cultural touchstone, but tax breaks, tax expenditures, and corporate and individual subsidies involve billions of dollars worth of taxpayer money and require substantial governmental involvement in, for instance, the markets for healthcare and higher education loans. Moreover many submerged policies disproportionately benefit the rich. In a series of fascinating experiments Mettler conducted, subjects were asked whether they favoured or opposed various submerged policies. Initially, large majorities favoured the Home Mortgage Interest Deduction, a tax break for mortgage costs. But when some participants were given information about the unequal distribution of HMID benefits, opinion in this group became strongly opposed. Citizens are largely unaware that the submerged state fosters inequality; if they were to be provided with this information they would not give it their support.
Interestingly, for a third group of participants who were given only a perfunctory summary of the policy and no information about the distribution of benefits, opinion became even more favourable toward the HMID and other regressive policies than for the control group who were given no information at all. The basic information treatment was intended to mimic statements that politicians routinely offer about the policies of the submerged state. As Mettler points out, the type and amount of information conveyed is of critical importance. Since the basic information was couched in terms of broad groups with a positive image, such as homeowners or workers saving for retirement, it naturally provoked a positive response from the participants. Only high levels of information encourage citizens to hold the government to account for submerged state policies. At this point and at others the reader is struck by the scope of Mettler’s demands for submerged state reform, and her book may well leave many with doubts about its practicability. The administration of a 1000-person telephone survey by scholars is one thing; transplanting the high information treatment to the real world of spending cuts and Fox News is quite another. Mettler’s assessment of Obama’s attempts to reform the submerged state shows that reformers face an uphill struggle. During the battle for healthcare reform, for instance, reformers were able to pass legislation only with a relatively high degree of cooperation from powerful vested interests, and the reform itself amounted to a reorganization of existing submerged policies rather than their elimination.
The Submerged State is a call for change and not just a scholarly volume. Mettler argues that in order to move toward a “more visible and vibrant democracy”, the role of vested interests should be reconfigured, political communication should reveal to the public what is at stake, and policies and their delivery should be redesigned to make governance more visible to citizens. It is a laudable laundry list and Mettler’s book makes a highly persuasive case for change—the submerged state is largely economically regressive, detrimental to citizens’ knowledge and agency, and often expensive. For instance, by switching from subsidised bank-based lending to direct public lending in the market for student loans the Obama administration saved $43 billion. Unhelpfully, from the perspective of opponents like Mettler, the policies of the submerged state are sometimes both desired and worthy of desire. People are often irrational and have poor self control. They want to lose weight but do not stop eating pudding, or they want a comfortable pension but do not take the right steps to save for retirement. Behavioural economists advise that gently nudging people to make the right choices through tax breaks and other hidden mechanisms can have various positive outcomes. The submerged state helps to increase consumption, boost job creation, encourage home buying, and stimulate the economy. Mettler’s point, in essence, is that pudding, pensions, and prosperity may sometimes be fostered or improved by the submerged state, but that democratic engagement, participation, and accountability are damaged, and these must take precedence.
Whether the reader accepts Mettler’s trade-off will depend in part on whether their conception of democracy is primarily concerned with participation or with the selection of leaders. Even if Mettler’s trade-off and participatory vision of democracy are accepted, her prescriptions are a hard recessionary sell. Progressives may worry about the imposition of Mettler’s post-materialist prescriptions on the average working American. Such handwringing is misplaced. Mettler demonstrates convincingly that the submerged state perpetuates economic inequality as well as confusion, ignorance, and apathy. The average citizen would benefit greatly if, as far as possible, Mettler’s prescriptions for the reduction of the submerged state were to be effected.
Ursula Hackett is reading for a DPhil in Politics and International Relations at Harris Manchester College, Oxford.