Social Welfare Policymaking Chapter 18

What is Social Policy and Why is it so Controversial? Social welfare policies provide benefits to individuals, either through entitlements or means-testing. – 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.

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, Poverty, and Public Policy

Who’s Poor in America? – Poverty Line: considers what a family must spend for an “austere” standard of living. – In 2012 the poverty line for a family of three is $19,090. – Many people move in and out of poverty in a year’s time. – Feminization of poverty: high rates of poverty among unmarried women

Income, Poverty, and Public Policy Poverty Rates by Race and Hispanic Origin: (Figure 18.1)

Current Poverty Rates for Minorities 2010 Number of Minorities in Poverty – Blacks 27% – Hispanics 26% – Asian-Americans 12% – Whites 9.9%

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— people with lower income pay more proportionately Earned Income Tax Credit: “negative income tax” that provided income to very poor people.

Transfer Payments What Part Does Government Play? -Transfer payments: benefits given by the government directly to individuals –Social Security, Medicare, student loans -Some transfer benefits are actual money. -Other transfer benefits are “in kind” benefits --such as food stamps. -Some are entitlement programs, others are means- tested.

The History of US Social Welfare Programs The Great Depression, 1929-WWII – Proved that all are susceptible to poverty and demanded a government response – Social Security Act of 1935 was the first major step by the federal government to help protect people against absolute poverty. – Created under the New Deal – Poor became a Democratic coalition

Social Policy and Poverty * President Johnson (1964) initiates laws to fight poverty during the Civil Rights era (War on Poverty) *President Reagan cut many of these programs in the 1980’s; favored tax cuts and “trickle-down” economics. -Conservatives argued that welfare programs discourage poor from solving their own problems

Ending Welfare As We Knew It The Welfare Reforms under President Clinton were comprehensive game-changers and responded to criticisms by conservatives that some on welfare are “lifers” Personal Responsibility and Work Opportunity Act, 1996 Families receive small payments with a maximum of TWO years to find employment People have a lifetime maximum of FIVE years on welfare States operate their own welfare programs with federal funds.

The Future of Social Security – Social welfare programs have become a major component of government – Social Security has grown rapidly since 1935, adding Medicare in – Employers and employees contribute to the Social Security Trust Fund. – The Trust Fund is used to pay benefits. – The ratio of workers to beneficiaries is narrowing. The Trust Fund will soon be in the red.

The Future of Social Security Social welfare programs have become a major component of government administration and spending Social Security has grown rapidly since 1935, adding Medicare in Is likely to go bankrupt as more reach retirement age and retirees outnumber workers As the cost of living rises, payments increase, too. Either taxes must increase or benefits must be cut Republicans have suggested privatizing Social Security

The Future of Social Security Means-Tested Programs Their future is even more tenuous than Social Security Poverty has NOT decreased despite current programs Some argue that federal benefits encourage people to remain in poverty

Social Welfare Policy Elsewhere – The U.S. has a smaller social welfare system than other comparable democracies. – Many industrialized nations are more generous than the U.S. – But the tax rates are higher in those countries than in the U.S. Democracy and Social Welfare – Social welfare can be an emotionally charged issue – It influences voters’ decisions and is a factor in choosing party identification