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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.
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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?
