I. The Social Welfare Debate (564-565)

Social welfare policies provide benefits to individuals, particularly those in need. There are two kinds of programs. Entitlement programs include benefits that certain qualified individuals are entitled to by law, regardless of need. Social Security and Medicare are the largest entitlement programs. Means-tested programs are available only to individuals below a poverty line. They are the most controversial programs. Those who see the poor as irresponsible tend to oppose these programs, while those who see poverty as largely beyond people’s control tend to support them.

II. Income, Poverty, and Public Policy (565-571)

A. Who’s Getting What?

Income distribution describes the share of national income earned by various groups in the United States. Income distribution in the United States is quite uneven. The 1980s were a period in which the old adage “the rich get richer and the poor get poorer” applied. Income is the amount of money collected between any two points in time. Wealth is the amount already owned. Studies of wealth display even more inequality than those of income.

B. Who’s Poor in America?

The U.S. Bureau of the Census has established the poverty line, which takes into account what a family would need to spend to maintain an “austere” standard of living. A decade-long study of five thousand American families showed that poverty might be even more extensive than the poverty line suggests. As many as 70 million Americans live close enough to the poverty line that some crisis could push them into poverty. Although the poor are a varied group, poverty is more common among African Americans, Hispanic, unmarried women, and inner-city residents. A recent phenomena has been the feminization of poverty, where more women, especially unmarried women with children, have been experiencing poverty.

C. What Part Does Government Play?

A progressive tax that takes a bigger bite from the incomes of the rich than the poor can make the poor better off and the rich worse off. A proportional tax that takes the same percentage from everyone can have no net effect on income. A regressive tax that takes a higher percentage from the lower income levels than from the well to do, can make the rich richer and the poor poorer. State sales tax tends to be regressive. At the national level the wealthy are paying a good deal of the income taxes used to support many government policies, including poverty-related social welfare programs. Through the Earned Income Tax Credit, the poorest of the working poor receive a check from Washington instead of paying taxes. The progressive federal taxes and the state regressive taxes tend to cancel one another out, leaving the net effect of taxes on people’s incomes, or tax incidence, in the United States proportional.

Government can affect the income a citizen receives by writing them a check. Benefits from government are called transfer payments; they transfer money from the general treasury to those in specific need. The biggest chunk of transfer payments goes to elderly and other recipients of Social Security.

III. The Evolution of American Social Welfare Programs (571-577)

A. Introduction

For centuries, societies considered family welfare a private concern. After the turn of the century, family-based support networks broke down in industrialized countries. The origins of social policies in America are found in pensions given to Civil War veterans and their families.

B. The New Deal and the Elderly

After the Great Depression many Americans began to think that governments should do more to protect their citizens against the consequences of economic downturns. The Social Security Act (1935) brought government into the equation of one generation’s obligations to another. Medicare was added to the system in 1965, making the post-1965 generation of adults substantially free of the ancient obligation of caring for its parents as well as for its children.

C. President Johnson and the Great Society

In the 1960s, America experienced an outpouring of federal programs to help the poor and the elderly, to create economic opportunities for those at the lower rungs of the economic ladder, and to reduce discrimination against minorities. Entitlement programs, aimed at the elderly, had strong political support since the elderly were a growing political constituency. Advocates of greater spending for poverty programs had a more difficult time since poverty was closely tied to race issues and the poor and their supporters had less ability to form a strong political base. However, minorities and the poor were becoming a more important constituency in the Democratic Party. The most important element for the success of both program types was strong leadership, especially by President Johnson.

D. President Reagan and the Limits to the Great Society

By the 1980s, public support for some welfare programs was eroding. The growing demands of defense spending and entitlement programs for the elderly had increased government deficits and threatened to stifle economic growth. President Reagan chose to target poverty programs as one major way to cut government spending. This served his own ideological beliefs of less government and more self-sufficiency. However, the basic outlines of the original programs persisted throughout the Reagan and Bush Administrations.

E. Welfare Reform in the 1990s

In 1996, President Clinton signed a new welfare reform bill. The major provisions of the bill included 1) each state would receive a fixed amount of money to run its own welfare programs, 2) people on welfare would have to find work within two years or lose all their benefits, and 3) a lifetime maximum of five years on welfare was set. The new name for public assistance to needy families is Temporary Assistance to Needy Families (TANF). TANF is small and declining. The Welfare Reform law has resulted in a dramatic decrease in the number of people on welfare. Proponents argue that this proves the system is working. Opponents argue that the decline in the welfare rolls is due to a strong economy, and an impending disaster will occur the next time a recession strikes.

IV. The Future of Social Welfare Policy (577-580)

A. The Entitlement Programs: Living on Borrowed Time?

Social Security is living on borrowed time. As the number of retirees grows, and their average benefit is constantly increased to cover the cost of living, Social Security expenditures are going to increase. Eventually payouts will exceed income and the system will be bankrupt. No solution (cutting benefits or raising taxes) is a politically pleasant one. Republicans have proposed diverting a small portion of Social Security contributions to private retirement funds.

B. The Means-Tested Programs: Do They Work?

The evidence that antipoverty programs have lifted the poor out of poverty is mixed. Charles Murray has argued that not only did the social programs of the Great Society and later administrations fail to curb the advance of poverty, they actually made the situation worse by making it profitable to be poor and victimized, thus encouraging the poor to stay that way. Others have argued that not only was spending for the poor relatively limited in these programs, but that economic growth and recessions were responsible for much of the movement into and out of poverty and the welfare programs provided a safety net for the poor.

C. Social Welfare Policy Elsewhere

Most industrial nations not only provide benefits, but also are usually more generous with them compared with the U.S. government. European nations tend to support greater governmental responsibility for these problems. Taxes commensurate with the benefits of social policy are common in Western European nations, far exceeding those in the United States.

V. Understanding Social Welfare Policy (580-583)

A. 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 well organized for political action while the poor have trouble influencing political decisions. The nature of democratic politics makes it difficult to withdraw government benefits once they are established. Tremendous pressures come from supporters to keep or expand programs and to preserve them from elimination.

B. Social Welfare Policy and the Scope of Government

Past democratic conflicts and compromises in the social welfare policy area have given Americans a huge social welfare bureaucracy at all levels of government. Government has gotten bigger as social welfare costs have grown. Large government programs, such as in the area of social welfare, require large organizations to administer them.