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Chapter 16

Chapter 16. Welfare and Education Policy: Providing for Personal Security and Need. 16-2. Preamble, U.S. Constitution. We the people of the United States, in order to … promote the general welfare…. 16-3. Poverty in America: The Nature of the Problem. The Poor: Who and How Many?

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Chapter 16

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  1. Chapter 16 Welfare and Education Policy: Providing for Personal Security and Need

  2. 16-2 Preamble, U.S. Constitution We the people of the United States, in order to … promote the general welfare…

  3. 16-3 Poverty in America: The Nature of the Problem • The Poor: Who and How Many? • Poverty Line • annual cost of a thrifty food budget multiplied by three • 2010= $22,000 • 1 in 7Americans (about 40,000,000) • 1 in 5 children (over 10,000,000) • largest proportion are divorced, separated, or unmarried mothers and their children • Geographically Concentrated • 1 in 7 rural residents • 1 in 9 urban residents (higher in the inner-city areas) • Suburbs are a safe haven from poverty • “Invisible” • most Americans underestimate the number of poor • Poverty is less visible in the suburbs than in inner cities or rural areas

  4. Percentage of families living in poverty by race/ethnicity

  5. The U.S. has the highest poverty rate among the major industrialized nations

  6. Poverty in America: The Nature of the Problem • Living in Poverty: By Choice or Chance? • Welfare policy in the United States is often an issue that divides the two political parties. • Charles Murray- Losing Ground • America has a permanent underclass of unproductive citizens who prefer to live on welfare and whose children receive little educational encouragement at home and grow up to be copies of their parents • Most poor Americans are that way because of circumstance • most poor are poor for temporary reasons • job loss or desertion by the father • full-time jobs are no guarantee to live above the poverty level • 40 hours a week at minimum wage = about $12,000 annually • 7% of full time workers are below the poverty line

  7. 16-4 The Politics and Policies of Social Welfare • Job Training • most Americans favor this type of assistance • work fosters initiative & responsibility • 1996 Welfare Reform Act • provided states with incentives to prepare recipients for work • 1998 Workforce Investment Act • helps local communities place the unemployed in jobs • Education Initiatives: Head Start • established in the 1960’s as part of LBJ’s war on poverty- “Great Society” • was designed for preschool education for poor children • has helped disadvantaged children develop learning skills • has been weakened by unsupportive environments at home • budget was reduced in the 1980’s, not adequately funded

  8. The Politics and Policies of Social Welfare • Income and Tax Measures • Income inequality • large gap between rich & poor (has widened recently) • Effective Tax Rate • the actual percentage of a person’s income that is spent to pay taxes • top income tax rate in 2004 was 35% (over $320,000) • a top tax rate of 50% is common in Europe • Social security is a flat tax at 6%, stops at $90,000 • average American family's effective tax rate is about ¾ of a family with an income over $1,000,000 • Earned Income Tax Credit (EITC) • Enacted in 1974 by Gerald Ford, strengthened by Reagan & Clinton • reallocates money to wage-earning lower-income families • about 20 million families receive EITC payments

  9. The top ten percent pay about half of all federal income taxes • some of this tax revenue is shifted downward to lower-income groups through welfare programs • compared to West European democracies, the U.S. shifts a smaller portion of income from the rich to the poor

  10. America’s preference for equality of opportunity is consistent with these beliefs- • individualism • personal liberty • Trust in the marketplace • Competition in the private sector is beneficial

  11. 16-5 Individual-Benefit Programs • Transfer Payment • a government benefit that is given directly to an individual (like EITC) • Entitlement Programs • requires the payment of benefits to any individual who meets the eligibility criteria • Negative Government • Government governs best by staying out of people’s lives • Individuals are expected to fend for themselves • Those unable to do so should be supported by friends and relatives • Prevalent in the 19thcentury • According to survey data, most Americans believe that welfare recipients could get along without assistance if they tried • Positive Government • Government intervention is necessary in order to enhance personal liberty and security when individuals are buffeted by forces beyond their control • Great Depression- 25% unemployment • FDR’s New Deal brought economic relief • Americans came to look favorably upon help form Washington

  12. 16-6 Individual-Benefit Programs • Social Insurance Programs • only those individuals who paid special payroll taxes when they were employed are eligible for these benefits • have a high level of public support because they are funded by the individuals who will be recipients • Social Security • Social Security Act of 1935- FDR’s greatest domestic policy legacy • today’s retirees receive benefits funded primarily by payroll taxes on people who are currently working • needs to be reformed because the number of workers may not bring enough money to cover the benefits of a growing number of retirees (solvency)

  13. Individual-Benefit Programs • Social Insurance Programs (cont.) • most social welfare programs are run jointly by federal and state governments • Unemployment Insurance • a joint state-federal program • feds collect the payroll taxes • states decide who pays the tax (employer, employee, or both) and decides the rate, conditions of eligibility, and benefit level • benefits average about a third of what an average worker makes and most are terminated after 26 to 39 weeks • A U.S. Bureau of Labor study revealed that about six out of seven workers who lost their job did so because of either a temporary layoff or the permanent elimination of a job position. • most layoffs are due to economic slowdowns and corporate restructuring

  14. Individual-Benefit Programs • Social Insurance Programs (cont.) • Medicare • enacted in 1965 • Part of Lyndon Johnson’s Great Society program • provides medical assistance to retirees • funded through payroll taxes • pays some, not all, of the costs of care in a hospital or nursing home • 2006- Congress added a prescription drug benefit

  15. 16-7 Individual-Benefit Programs • Public Assistance Programs • funded through general tax revenues and are available only to the needy • Means Test • applicants for assistance must prove that they are poor enough for the benefit • The programs are considered “welfare” and the recipients are called “welfare cases” • Americans are less supportive of public assistance programs • social insurance is “earned”- PAPs are “handouts” • Welfare Reform Act of 1996 • Shortened the length of eligibility for welfare programs • Required able-bodied recipients to find work or risk losing benefits • One of the only social welfare programs to be supported by a majority of congressional Republicans at the time of enactment • Supplemental Security Income • part of the Social Security Act of 1935 • for the blind and elderly poor • now includes the disabled • NOT widely criticized because the recipients have physical limitations

  16. Individual-Benefit Programs • Public Assistance Programs (cont.) • Aid to Needy Families • Aid to Families with Dependent Children (AFDC) • began in the 1930’s • lost support in the 1970’s because of a public perception that it encouraged welfare dependency and irresponsibility on the part of the recipients • terminated in 1996 • Temporary Assistance to Needy Families (TANF) • replaced AFDC in 1996 • States have discretion in handling their welfare cases • eligibility is limited to no more than five years in a lifetime • within two years, the head of the household must find work • unmarried teenage mothers must remain in school and live with a parent • single mothers must cooperate in identifying the father

  17. Individual-Benefit Programs • Public Assistance Programs (cont.) • Food Stamps • an “in-kind benefit” not cash but stamps that must be spent on food • criticized because it is costly to taxpayers, stigmatizes users by identifying them publicly, and is based on need and not earned • Subsidized Housing • rent vouchers • tax breaks/deductions for homeowners • Medicaid • healthcare for poor people who are already on welfare • funded by tax revenues • funded by both the feds and states • controversial due to its cost

  18. Number of Welfare Recipients,1996-2009

  19. The Cumbersome Administrative Process by Which WelfareRecipients Get Their Benefits

  20. Politics and Policies of Social Welfare • Culture and social welfare • Inefficiency • Higher bureaucratic costs: federal structure, and need to check eligibility of each individual • Inequity • Social security and Medicare: many high-income earners receive benefits • Families in the top fifth of the income population receive more in social security and Medicare benefits than the government spends in total on TANF, SSI, food stamps, and housing subsidies for the poor

  21. 16-8 Education as Equalityof Opportunity:The American Way • Public Education: Leveling Through the Schools • called the great leveler when it began in the early 19th century • The federal government’s role in education was relatively small before the 1960s. • The best predictor of how well schools perform on standardized tests is the community’s wealth. • The Supreme Court has ruled that states are obliged to give all children an “adequate” education as opposed to one that is “equal” across communities • Public school spending • Over 90% of funding comes from state and local governments • Charter schools • publicly funded but have more freedom in determining curricula than public schools • School choice • vouchers- Americans are divided on the issue

  22. Favor? or Oppose?

  23. Education as Equalityof Opportunity:The American Way • The Federal Role in Education: Political Differences • No Child Left Behind- G.W. Bush • supports standards-based education reform • based on the belief that setting high standards and establishing measurable goals can improve individual outcomes in education • ties federal funding to national test results in reading, math, and science. • Race to the Top- Barack Obama • provides competitive grants to encourage and reward States that are creating the conditions for education innovation and reform

  24. The Earning Power of a College Degree- (Avg. earning ratio for non-college graduates is indexed to 100 for each country)

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