Social Welfare Policymaking Chapter 18

The Social Welfare Debate Two main types: Entitlement programs: Government benefits that certain qualified individuals are entitled to by law, regardless of need. Means-tested programs: Government programs only available to individuals below a poverty line. “Deserving” vs. “Undeserving” poor

Income, Poverty, and Public Policy Who’s Getting What? Income: amount of funds collected between any two points in time. Wealth: amount of funds already owned. Income Quintile 1960 1999 Lowest fifth 4.9 3.7 Second fifth 11.8 9.0 Third fifth 17.6 15.0 Fourth fifth 23.6 23.0 Highest fifth 42.0 49.3 From Table 18.1

Income, Poverty, and Public Policy Who’s Poor in America? Poverty Line: considers what a family must spend for an “austere” standard of living. In 1999 a family of three had a poverty line of $13,470. Many people move in and out of poverty in a year’s time. High rates of poverty among unmarried women

Income, Poverty, and Public Policy Figure 18.1- Poverty Rates, 1999

Income, Poverty, and Public Policy What Part Does Government Play? Taxation. Progressive tax: people with higher incomes pay a greater share. Proportional tax: all people pay the same share of their income. Regressive tax: opposite of a progressive tax Earned Income Tax Credit: “negative income tax” that provided income to very poor people.

Income, Poverty, and Public Policy What Part Does Government Play? Government Expenditures. Transfer payments: benefits given by the government directly to individuals. Some transfer benefits are actual money. Other transfer benefits are “in kind” benefits where recipients get a benefit without getting actual money. Some are entitlement programs, others are means-tested.

The Evolution of American Social Welfare Programs The New Deal and the Elderly The Great Depression led many citizens to want the government to help protect against economic downturns and causes of poverty beyond their control. Social Security Act of 1935 was the first major step by the federal government to help protect people against absolute poverty.

The Evolution of American Social Welfare Programs President Johnson and the Great Society Johnson declared a “war on poverty” and created many new programs and it was his leadership that made the difference. Medicare, school-aid programs and anti-poverty programs were some examples. Other programs were designed to provide training and jobs, not just transfer payments.

The Evolution of American Social Welfare Programs President Reagan and the Limits to the Great Society Reagan (like Johnson) played a lead role in getting attention on benefit programs. Many programs had benefits reduced, and people were removed from benefit rolls. Democrats worked to lessen the cut of the benefits to try and protect the truly poor.

The Evolution of American Social Welfare Programs Welfare Reform in 1990’s Clinton (a Democrat) was able to pass a more significant welfare reform law than his Republican predecessors. The new program put limits on the amount of time a person could receive benefits. It also gave the states money to run their own welfare programs.

The Future of Social Welfare Policy The Entitlement Programs: Living on Borrowed Time? Long-term sustainability of entitlement programs is hotly debated. What can be done about Social Security? Cut benefits? Raise tax rates? Allow people to invest on their own?

The Future of Social Welfare Policy The Means-Tested Programs: Do They Work? Programs for the poor are not as popular as programs for the elderly. The percentage of people in poverty has not changed significantly since the 1960’s. But there is little agreement on if the programs help people in poverty or not.

The Future of Social Welfare Policy Social Welfare Policy Elsewhere Many industrialized nations are more generous than the U.S. But the tax rates are higher in those countries than in the U.S. Other countries (especially European) have worked to reform their welfare programs.

Understanding Social Welfare Policy Democracy and Social Welfare The U.S. has the smallest welfare system. There is considerable unequal political participation by those that use the programs. Social Welfare Policy and the Scope of Government When social welfare costs go up, the size of government goes up. What goes up is often difficult to bring down.

Internet Resources Census Bureau poverty reports American Public Welfare Association Heritage Foundation Social Security Administration “Green Book” Each item is hyperlinked to the website in the book.