Chapter 17Social Welfare

THEME A

American Welfare in Comparative Perspective

1. Americans have generally been had a more restrictive view of who is entitled to receive government assistance.

2. We have been slower than other countries to adopt many of the components of the welfare state.

3. We have insisted that the states (and to a degree private enterprise) play a larger role in running welfare programs.

4. We believe in equality of opportunity but not equality of results.

THEME B

Welfare Politics As Majoritarian Politics

1. Social Security Act of 19352. Economic Opportunity Act of 1964 (War on Poverty) 3. Medicare Act of 1965 4. Family Support Act of 1988 5. Welfare Reform Act of 1996(Temporary Assistance for Needy Families --TANF)

Social Security and Medicare account for 2/3 of all federal welfare expenditures.

Majoritarian welfare programs Majoritarian welfare programs Social Security Act of 1935Social Security Act of 1935

– Great Depression of 1929: local relief overwhelmed Great Depression of 1929: local relief overwhelmed – Elections of 1932: Democrats and Franklin Roosevelt Elections of 1932: Democrats and Franklin Roosevelt

swept in swept in Legal and political roadblocks; was direct welfare Legal and political roadblocks; was direct welfare unconstitutional? unconstitutional? Fear of more radical movements Fear of more radical movements Long's "Share Our Wealth" Long's "Share Our Wealth" Sinclair's "End Poverty in California" Sinclair's "End Poverty in California" Townsend's old age programTownsend's old age program

– Cabinet Committee's two-part plan Cabinet Committee's two-part plan "Insurance" for unemployed and elderly "Insurance" for unemployed and elderly "Assistance" for dependent children, blind, aged "Assistance" for dependent children, blind, aged Federally funded, state-administered program Federally funded, state-administered program under means testunder means test

A client welfare policy: AFDCA client welfare policy: AFDC– A client welfare policy: AFDC A client welfare policy: AFDC

Scarcely noticed part of Social Security Act Scarcely noticed part of Social Security Act Federal government permitted state to Federal government permitted state to – Define Define needneed – Set benefit levels Set benefit levels – Administer programAdminister program

Federal government increased rule of operation Federal government increased rule of operation New programs (e.g., Food Stamps, Earned Income New programs (e.g., Food Stamps, Earned Income Credit, free school meals) Credit, free school meals) Difficult to sustain political support Difficult to sustain political support – States complained about federal regulations States complained about federal regulations – Public opinion turned against program Public opinion turned against program – Composition of program participants changedComposition of program participants changed

Medicare Act of 1965Medicare Act of 1965

– Medical benefits omitted in 1935: controversial but Medical benefits omitted in 1935: controversial but done to ensure passage done to ensure passage

– Opponents Opponents

AMA AMA

House Ways and Means Committee under Wilbur House Ways and Means Committee under Wilbur MillsMills

– 1964 elections: Democrats' big majority altered Ways 1964 elections: Democrats' big majority altered Ways and Means and Means

– Objections anticipated in plan Objections anticipated in plan

Application only to aged, not everybody Application only to aged, not everybody

Only hospital, not doctors,' bills coveredOnly hospital, not doctors,' bills covered– Broadened by Ways and Means to include Medicaid for Broadened by Ways and Means to include Medicaid for

poor; pay doctors' bills for elderlypoor; pay doctors' bills for elderly

Reforming majoritarian welfare Reforming majoritarian welfare programsprograms

Social Security Social Security – Not enough people paying into Social Security Not enough people paying into Social Security – Three solutions Three solutions

Raise the retirement age to seventy, freeze the size of Raise the retirement age to seventy, freeze the size of retirement benefits, raise Social Security taxes retirement benefits, raise Social Security taxes Privatize Social Security Privatize Social Security Combine first two methods and allow individual Combine first two methods and allow individual investment in mutual fundsinvestment in mutual funds

Medicare Medicare – Problems: huge costs and inefficient Problems: huge costs and inefficient – Possible solutions Possible solutions

Get rid of Medicare and have doctors and hospitals work Get rid of Medicare and have doctors and hospitals work for government for government Elderly take Medicare money and buy health insuranceElderly take Medicare money and buy health insurance

Family Assistance Act of 1969 - labeled negative income tax or guaranteed annual incomeGoal was to reduce fraud and increase work incentive. Failed because it got a negative label.

Perception is Everything

THEME C - Welfare LegislationFamily Support Act of 1988 and Welfare Reform Act of 1996, (Temporary Assistance for Needy Families --TANF) had many of the same goals as Family Assistance Act of 1969, but portrayed differently:

1. Absent fathers of welfare families would have child support payments withheld from paychecks

2. States would be required to provide education and/or job training to welfare recipients, except for those individuals with children under three years of age.

3. The work program would require fathers in two-parent families to spend at least sixteen hours a week in community service in exchange for welfare benefits

Passed because of positive image.

Two kinds of welfare programsTwo kinds of welfare programs

– Majoritarian politics: almost Majoritarian politics: almost everybody pays and benefits, for everybody pays and benefits, for example, the Social Security Act and example, the Social Security Act and the Medicare Act the Medicare Act

– Client politics: everybody pays, Client politics: everybody pays, relatively few people benefit, for relatively few people benefit, for example, the AFDC program example, the AFDC program

Two kinds of welfare programsTwo kinds of welfare programs

– Majoritarian politics Majoritarian politics Programs with widely distributed benefits and Programs with widely distributed benefits and costs costs

– Beneficiaries must believe they will come out ahead Beneficiaries must believe they will come out ahead – Political elites must believe in legitimacy of programPolitical elites must believe in legitimacy of program

Social Security and Medicare looked like "free Social Security and Medicare looked like "free lunch" lunch" Debate over legitimacy: Social Security (1935) Debate over legitimacy: Social Security (1935)

– Constitution did not authorize federal welfare Constitution did not authorize federal welfare (conservatives) (conservatives)

– But benefits were not really a federal expenditure But benefits were not really a federal expenditure (liberals)(liberals)

Good politics unless cost to voters exceeds Good politics unless cost to voters exceeds benefitsbenefits

Two kinds of welfare programsTwo kinds of welfare programs

– Client politics Client politics Programs pass if cost to public not Programs pass if cost to public not perceived as great and client considered perceived as great and client considered deserving deserving

Americans believe today that able-bodied Americans believe today that able-bodied people should work for welfare benefits. people should work for welfare benefits.

Americans prefer service strategy to Americans prefer service strategy to

income strategyincome strategy

Figure 17.1 SSI, TANF, and Food Figure 17.1 SSI, TANF, and Food Stamp Recipients, 1980-1998Stamp Recipients, 1980-1998

Source: U.S. Census Bureau, Statistical Abstract of the United States, 1999, 382.

Good NewsGood News

Since 1960 in the United States:Since 1960 in the United States:

1. The percentage of persons living in 1. The percentage of persons living in poverty has declined.poverty has declined.

2. The percentage of blacks living in 2. The percentage of blacks living in poverty has declined.poverty has declined.

3. The percentage of elderly living in 3. The percentage of elderly living in poverty has declined.poverty has declined.

New York TimesNew York TimesBy ROBERT PEARBy ROBERT PEAR Published: October 13, 2003Published: October 13, 2003

ASHINGTON, Oct. 12 — New government ASHINGTON, Oct. 12 — New government figures show a profound change in welfare figures show a profound change in welfare spending, shifting money from cash spending, shifting money from cash assistance into child care, education, assistance into child care, education, training and other services intended to training and other services intended to help poor people get jobs and stay off help poor people get jobs and stay off welfarewelfare

New York TimesNew York TimesCash assistance payments now account for less Cash assistance payments now account for less than half of all spending under the nation's main than half of all spending under the nation's main welfare program, Temporary Assistance for welfare program, Temporary Assistance for Needy Families, federal officials say.Needy Families, federal officials say.

The proportion has been declining steadily since The proportion has been declining steadily since 1996, when Congress revamped welfare and 1996, when Congress revamped welfare and abolished the guarantee of cash assistance for abolished the guarantee of cash assistance for the nation's poorest children. The 1996 law the nation's poorest children. The 1996 law required most adults to work within two years of required most adults to work within two years of receiving aid and gave states sweeping authority receiving aid and gave states sweeping authority to run their welfare and work programs with lump to run their welfare and work programs with lump sums of federal money.sums of federal money.

New York TimesNew York Times

Temporary Assistance for Needy Temporary Assistance for Needy Families is financed jointly by the Families is financed jointly by the federal government and the states. federal government and the states. Of the total of $25.4 billion spent in Of the total of $25.4 billion spent in 2002, about $11.2 billion was for 2002, about $11.2 billion was for cash assistance and $14.2 billion was cash assistance and $14.2 billion was for noncash benefits for noncash benefits

New York TimesNew York Times

Since the welfare law was signed in Since the welfare law was signed in 1996, the number of people on 1996, the number of people on welfare has plunged, to 5 million welfare has plunged, to 5 million from 12.2 million, a 59 percent from 12.2 million, a 59 percent decline. The federal government decline. The federal government provides a fixed amount to the provides a fixed amount to the states, $16.5 billion a year, states, $16.5 billion a year, regardless of how many people are regardless of how many people are on the rolls on the rolls

New York TimesNew York Times

The number of people in poverty rose The number of people in poverty rose to 34.6 million in 2002, from 31.6 to 34.6 million in 2002, from 31.6 million in 2000, the Census Bureau million in 2000, the Census Bureau reported last month. But the number reported last month. But the number of people on welfare continued to of people on welfare continued to decline, to 5 million in 2002, from 5.8 decline, to 5 million in 2002, from 5.8 million in 2000.million in 2000.

New York TimesNew York Times

An Ohio official said the new strategy An Ohio official said the new strategy was no less expensive than the old was no less expensive than the old one.one.

"The cheapest thing to do is to pay a "The cheapest thing to do is to pay a woman to stay home and raise kids woman to stay home and raise kids in extreme poverty," he said. "We did in extreme poverty," he said. "We did that for 60 years.that for 60 years.

SELF - TEST