Chapter 19Social 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 1935

• 1964—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 • Idea: Provide a source of retirement income through a

payroll taxpayroll 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 68-70• 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 1996-2006 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 2012.• Remains extremely controversial.