Chapter 19 Social Welfare in the U.S. An Overview of Programs

Pop Quiz 19 1.What event first led to the creation of federal social welfare programs in the US? 2.Under what President were Medicaid and Medicare created? 3.What program replaced AFDC in 1996? 4.Explain the difference between Medicare & Medicaid. 5.Name a current federal social welfare plan that is means tested.

Introduction: 2 kinds of welfare programs today: 1.Majoritarian: Examples include Social Security and Medicare Everyone pays through payroll taxes, everyone benefits Cost are skyrocketing due to aging Boomers Programs are very difficult to reform 2.Client: Examples include TANF, food stamps, and Medicaid Issue today is legitimacy…public opinion a must! BIGGEST DIFFERENCE IN THE TWO?? Majoritarian not means tested, Client programs are!

Factors Shaping Social Welfare in the U.S. Who is entitled? Americans have a much more restrictive view “Fair share” view doesn’t mesh with self-reliance Late arrival of welfare in the U.S. By 1935’s Social Security Act, Europe was 3 decades in! For US, it took Great Depression to reform Influence of federalism States were testing grounds…no federal involvement until 1930s (By 1935, 35 states had “old age” pensions) Private entities often administered 1996 Welfare Reform Act created charitable choice, expanded by George W. Bush in 2001 to include faith-based organizations. Today, $1.2 billion are awarded to these.

Majoritarian Welfare History 1929—Great Depression 1932—FDR & Dem. Congress elected Quick Fix: Money to bail out charities & local governments Creation of public works job opportunities Long term Fix: Cabinet Committee on Economic Security studied European models Social Security Act of —LBJ & Dem. Ways & Means Comm. Draft of Medicare…applies to hospitalization Ways & Means add-ons include Medicaid & Medicare doctor visits

Social Security Reform! Social Security payroll tax Idea: Provide a source of retirement income through a payroll tax (OASDI: Old Age, Survivors & Disabled Insurance is paid by both employees and employers). Problem As Boomers age, the amount of people paying into social security is not enough to support retirees. Solutions Raise the retirement age to Reduce or freeze amounts of benefits Raise SS taxes Privatize Social Security through stock market Combination of some of these

Medicare Reform! Medicare Idea: Everyone who is 65 or older is covered by hospital insurance and medical insurance. Problems A lot of people use medical services when they don’t really need them Some doctors and hospitals overcharge the government for their services Program is bankrupting the social security system Solutions Have doctors work for the government Allow elderly to take funds to buy private insurance or HMOs (Ryan Plan)

Client Welfare Programs All client programs are means tested and come out of general government revenues. Aid to Families with Dependent Children (AFDC) Created in response to the Great Depression Allowed states to define what constituted as a “need” Led to creation of food stamps, housing assistance, etc. Abolished in 1996—Replaced with Temporary Assistance for Needy Families (TANF): WHY? Program lost public support Recipients no longer “deserving” (Living off the system) Encouraged out-of-wedlock births

Changes in Welfare Programs Welfare Reform Act of 1996 brought many changes: Abolished AFDC, replaced with TANF Must participate in job training Lifetime limits No increases for additional children Drastically reduced the number on welfare from by 62%. Even the Great Recession did not see a significant rise in the number of recipients.

Other Client Welfare Programs SNAP (Supplemental Nutrition Assistance Programs) led to the use of EBT cards in place of traditional stamps to help families buy food. Supplemental Security Income (SSI) cash payments to blind, disabled or aged whose incomes fall below a determined amount. Medicaid is an insurance program that pays the medical expenses of persons on government assistance programs like TANF or SSI. EITC: Earned Income Tax Credit allows working families with children to receive money via a tax refund from the government if their income is below a certain level.

Results of TANF Reforms

Other Social Welfare Issues Affordable Care Act: Subsidies available to those who don’t have insurance but do not qualify for Medicaid. Penalizes those who can but don’t buy health insurance. Creates buyers’ pools to reduce the overall cost of insurance. Upheld as constitutional in Remains extremely controversial.