WELFARE POLICY

Means test While an entitlement program such as Social

Security is available to all who meet certain criteria (age 65 and older), a means test requires recipients to prove a lack of assets in order to qualify for benefits from a program.

Means testing Social Security and Medicare has been suggested as a way to save money and prolong the lives of these programs.

The Social Security payroll tax cut was implemented as part of the Obama stimulus package, not the Bush tax cuts as I said previously.

Conflicting views of causes of poverty in US

Traditional conservative view: Most poverty is caused by behavioral characteristics: laziness, stupidity, irresponsibility, bad choices (substance abuse, promiscuity, dropping out of school). Government can’t fix this.

Conflicting views of causes of poverty in US

Traditional liberal view: Private enterprise cannot by itself provide enough jobs, opportunity or resources for everyone; historical discrimination and social structures exacerbate poverty and limit opportunity, so some people will be left out through no fault of their own. Government has an obligation to help these people.

Conflicting views of causes of poverty in US

Eventual consensus: Government has a responsibility to provide for the truly needy, while behavioral dependency has to be addressed and personal responsibility has to be developed

“Social Safety Net” “Social safety nets (SSNs) are

noncontributory programs that target the poor and vulnerable and are designed to reduce poverty and inequality, enable better human capital investments, improve social risk management, and offer social protection.” (World Bank)

In the US and other developed countries, social safety nets generally refer to welfare programs for the poor.

“General Welfare”

The US Constitution gives the Congress power to “provide for…the general Welfare of the United States,” but many social programs have been state-centered or coordinated between state and local governments.

Social Welfare Programs

Social welfare programs either transfer income or provide services to individuals to improve the quality of their lives

Technically, public education qualifies as a social welfare program

Social Security and Medicare are not targeted specifically at the poor

25.5 million female-headed households in US in 2004; 38% below the poverty line

Types of Welfare Programs Direct cash transfers (money, in the form

of government checks, to individuals) – AFDC was a direct cash transfer program, TANF, SSI, EITC, some state programs

In-kind programs provide goods and services: food stamps, Medicaid, child nutrition (WIC, school lunch)

Social insurance: Social Security, Medicare, Unemployment compensation, Worker’s comp

Types of Welfare Programs

Medical programs are biggest category We’ll talk about Medicare, Medicaid, etc.,

when we discuss health care as our next topic Cash assistance programs are second

biggest category Less than one-quarter of state welfare

expenditures go to cash assistance programs (TANF, SSI, general assistance)

Poverty in the US 2007 federal poverty guideline for a family

of four is $20,650 (poverty level is defined as three times the cost of food).

One in five American children lives in poverty (one in three black kids)

FY 2005: Poverty rate was 21.6% in Mississippi and 7.6% in New Hampshire

White 8.3%, Black 24.9%, Hispanic 21.8%, Asian 11.1%

Over 11 million people who worked at least part-time in 2006 still fell below the poverty line

Funding levels

States received $300 Billion in federal funds in 2006 for health, education and welfare

State and local governments also spend about $300 Billion a year on health care and welfare

Trends: Health care costs and expenditures are growing as welfare spending is shrinking

Funding levels

Benefits tend to be higher in wealthier states – greater tax base and fewer needy people, greater political control by those whose interests are not served by generous welfare spending

More politically conservative states spend less, even though many of them are poorer (Mississippi); states with larger African American populations tend to have stricter eligibility requirements for social programs

Funding levels

New York State spends $1700 per capita on social welfare programs; Nevada spends $515

People who are eligible for most social programs are automatically eligible for Medicaid and may stay eligible for a period of time after leaving welfare

New Deal Social Programs Aid to Families with Dependent Children

(AFDC) was established in 1935. Assistance to widows and orphans (most

women weren’t in the paid workforce and the assumption was that they needed to be provided for)

Eligibility criteria: Single-parent family or two-parent family where primary wage earner is unemployed, child under 18

Income eligibility was set by states

Problems with Traditional Welfare

No time limits, so welfare became a multigenerational way of life when it was intended as temporary assistance (if your child under 18 had a baby, the family was eligible until the baby turned 18)

Emphasis on single-parent families (almost all of which are female-headed) discouraged marriage and promoted illegitimacy and poverty

Problems with Traditional Welfare

No expectation of improvement No incentive to get off welfare No job training or skill development to

achieve economic self-sufficiency Greater benefits for larger families led to

irresponsibility in having children More than two-thirds of recipients got it

for more than eight years

Welfare Reform of 1996 In the early 1990’s, several states were granted

waivers from federal AFDC requirements to experiment with different types of welfare programs.

Wisconsin developed “workfare” requirements South Carolina Family Independence Act of 1995 The success of these experiments led to the

federal Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA)

“Reconciliation” is a budget term Replaced AFDC with Temporary Aid to Needy

Families (TANF)

TANF

“The four purposes of TANF are: Assisting needy families so that children can

be cared for in their own homes Reducing the dependency of needy parents by

promoting job preparation, work and marriage Preventing out-of-wedlock pregnancies, and Encouraging the formation and maintenance

of two-parent families” (US Dept. of Health and Human Services)

TANF

AFDC was primarily a federally-administered program with benefits direct to individuals, while TANF is primarily administered by the states, funded by block grants from federal government to states

Time limits: 24 months consecutively, 60 months lifetime unless certain criteria are met for a waiver

Work, school or job training requirements as a condition of receiving benefits

Unmarried teenagers and their children, and children born while their mothers were receiving benefits, may be denied coverage

Recipients may be required to complete high school

Federal work requirements

Most recipients must work in order to receive benefits Single parents: 30 hours per week, or 20 hrs./wk. with

a child under 6 Two-parent families: 35 hrs/week or 55 hrs. if they

receive federal child care assistance Work activities: job, work experience, training, job

search and coaching, vocational education, community service, secondary school attendance, providing child care to individuals participating in community service.

Teenaged parents must live with their parents or in an adult-supervised setting

TANF Block Grant $16.5 Billion to states in FY 2009.

TANF caseloads

Less than 2% of families nationally Approx. 1% of population of SC (41,000);

this is up substantially since the beginning of the recession in 2008, but about one-sixth the AFDC caseload prior to welfare reform in 1996

Average monthly benefit varies by state States may exempt parents of infants from

work requirements Mother of two in SC: $163-$205 a month in

benefits

Additional programs established by TANF

Child support enforcement Marriage initiatives Fatherhood initiatives Child care initiatives Abstinence Education

Additional social programs

Medicare (1965) Medicaid (1965) and SCHIP (1995) Head Start (1965) and Early Head Start

(1995): Head Start: Comprehensive child development

services for eligible low-income children from birth until mandatory school attendance.

EHS is for pregnant women. Other social programs – some states have

General Assistance programs Health care and Affordable Care Act – impact

on poverty (to be discussed next time)

Food Assistance

Food Stamp program established 1964 Funded by US Department of Agriculture and

administered by states “Food stamps” replaced by EBT cards which can

only be used for certain staple foods 26 million recipients in 2005 Average benefit is $92.69/month Able-bodied recipients under 60 without

dependents are eligible for three months of assistance over a three-year period

Eligibility requirements make it difficult for many to apply

SC EBT program

Food Assistance

WIC (Women, Infants and Children) Target population is pregnant and

breastfeeding women, infants and children under 5.

Administered by USDA, state agencies and local providers

Means-tested, eligibility requirements vary by state

Housing Assistance

Community Development Block Grant (1974)

$4.7 Billion in federal funding in FY 2006 Also federal aid for housing and

development projects

Earned Income Tax Credit

Enacted 1975 Offsets burden of Social Security payroll

taxes paid and can reduce the federal tax burden for low-income families

Total income limits to qualify in 201: $13,660 for single, childless taxpayer $18,740 for childless couple filing jointly Limits increase up to $49,078 for married

couple with three or more children, filing jointly

Continuing problems

People are worse off if they can’t remain eligible for things like food stamps once they get jobs

What if you have no transportation or child care – how can you work then?

Are the jobs where the needy live?