2 Types of Social Welfare Policies Social Welfare Policies: Policies that provide benefits, cash or in-kind, to individuals, based on either entitlement or means testing.Entitlement programs: Government programs providing benefits to qualified individuals regardless of needMeans-tested programs: Government programs providing benefits only to individuals who qualify based on specific needs
3 Income, Poverty, and Public Policy U.S. has one of the world’s highest per capita incomesNo industrialized country has wider extremes of income than the U.S.
4 Who’s Getting What?Income distribution: The way the national incomes is divided into “shares” ranging from the poor to rich.In recent decades, the share of the highest fifth has grown while those of the lowest fifths have gotten smaller.Relative deprivation: A person perceives that her or she is not doing well economically in comparison to others.
5 Who’s Poor in America?Poverty line: Income below this amount means people are poor, based on what a family must spend for an “austere” standard of living, set a three times the cost of a subsistence diet.In 2009, the poverty threshold for a single adult was $11,161Poverty rates are higher for African Americans, Hispanics, unmarried women, children, and inner- city residents
6 Who’s Poor in America?Feminization of poverty: The increasing concentration of poverty among women, especially unmarried women and their children.
7 How Public Policy Affects Income Progressive tax: A tax by which the government takes a greater share of the income of the rich than of the poor.Proportional tax: A tax takes the same share of income from everyone, rich and poor alike.Regressive tax: A tax in which the burden falls relatively more heavily on low-income groups than on wealthy taxpayers.
8 How Public Policy Affects Income Earned Income Tax Credit: A refundable federal income tax credit for low income working individuals and families.In 2010, workers raising 1 child with incomes less than $16,420 could get up to $3,043 ETCTransfer payments: Benefits given by the government directly to individuals either cash transfers, such as Social security payments, or in- kind transfers, such as food stamps and low- interest loans.
9 WelfareSocial Security Act of 1935: created the Social Security program an the Aid to Families with Dependent Children program.In 1964 President Lyndon Johnson declared a War on Poverty, and added welfare programs to the policies that fight poverty.In 1981, President Reagan declared war on antipoverty programs, persuaded Congress to cut welfare benefits and lower number of Americans on the welfare rolls (welfare has proved to be a failure).
10 Ending Welfare (as we know it) The Welfare Reform of 1996: Personal Responsibility and Work Opportunity Reconciliation Act: welfare reform law of 1996, which implemented the Temporary Assistance for Needy Families (TANF) program.TANF replaced Aid to Families with Dependent ChildrenTANF requires people on welfare to find work in 2 years and sets a lifetime maximum of 5 years.
11 Social SecurityGrowth of Social Security: In 2010, average monthly check for retired workers was $1,100, up from $22.54 in 1936Social security trust fund: The account that Social Security contributions are put into and used to pay eligible recipients.Current payroll taxes are 12.4%Workers contribute 6.2% of their wages, employers math itTrust Fund must invest money in U.S. Treasury bonds
12 Social Security Most expensive public policy in the USA! Reforming Social Security: President Bush proposed diverting 1/3 of individuals’ Social Security contribution to private retirement funds, such as a private account, stock or bond; President Obama is more likely to propose raising payroll taxes
13 Welfare Policy Elsewhere Most industrial nationals tend to be far more generous with social welfare programs than the United StatesGreater generosity is evident in programs related to health, child care, unemployment compensation, and the elderly.We (U.S) see poverty and welfare as individual concerns, and Europeans support greater governmental responsibility for these problems.
14 Welfare Policy Elsewhere Europeans often have a more positive attitude toward government.Americans are more likely to distrust government action in areas such as social welfare policy.Europeans pay a high price for generous benefits: tax rates in Western European nations far exceed those in the U.S.Funding problems are greater in Europe due to level of benefits and shrinking populations.
15 Democracy and Social Welfare In the social welfare policy arena, the competing groups are often quite unequal in terms of political resources.The elderly are relatively well organized and often have the resources needed to wield significant influence in support of programs they desire.Influencing political decisions is more difficult for the poor because they vote less frequently and lack strong, focused organizations and money.
16 Social Welfare Policy and Scope of Government Nothing more clearly accounts for the growth of government than social welfare spendingGrowth of government is driven by the growth of social welfareAmerican social welfare system grows generation by generation.