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Social Insurance: “cornerstone of U.S. social welfare”* Individuals must insure themselves against indigence * Money is set aside in trust* Managed by the government* Workers are entitled to benefits based upon previous contributions* Workers must contribute before filing a claim
* Not subject to a means test
* Universal: benefits are received as legal entitlement regardless of personal wealth
* Less stigma compared to public assistance
“I earned it, it’s not charity.”
* Originally designed to replicate private insurance. Now it has taken on some of the characteristics of public insurance due to dependency.
* Major Goal: Maintain income by replacing a lost income with a portion of lost earnings.
1920: Federal Employee Retirement Program began
1931: 17 states have old-age assistance programs However, they are very restrictive and punitive
1935: All states with the exception of Georgia & South Carolina have assistance programs for widows and children
1935: Social Security Act of 1935, framework for modern welfare state
1948: All states have Worker’s Compensation
1983 Partial Reserve System
Some Abbreviations for You
That are Sure to be Said as a SW:
OASDI: Old-age, survivors, and disability insurance
UI: Unemployment Insurance
WC: Worker’s Compensation
DI: Disability Insurance
Part A: Refers to federal hospital insurance
Part B: Refers to supplementary medical insurance
* Social insurance programs are financed four times higher than public welfare.
* It accounted for 22.1% of the 1993 total federal budget.
* 3.4% of the federal budget went to public assistance.
* It is the income for 38-39% of aged and disabled persons.
* Upon retirement/disability, worker receives monthly benefit. Also, a widow(er) or surviving children can collect the benefit.
* Must have paid in 40 quarters (10 years).
* First line of defense for people who are fired or laid off.
* Temp., partial wage replacement meant to stabilize economy during recession.
* Regular, state-funded with max. of 26 weeks of benefits OR fed & state-funded extended prog. With an add’l 13 weeks of coverage.
* Cash, medical assistance, rehabilitation, and disability/death benefits to victims of industrial accidents.
Privatization of Social Security
* Purpose is to increase worker control of retirement.
* Claims social security is depressing private savings, and this creates less capital for investment.
* Currently we have guaranteed pension vs. risky stock market.
* This would create a stiff tax for young workers.
* Would undermine security of workers who take time off for childbearing, care of elderly parents, illness.
*Lowest wage workers are supported by contribution of higher paid workers -- EVERYONE must contribute!!!
* Former Aide to Dependent Children
* Temporary Assistance to Needy Families
* Supplemental Security Income
* General Assistance
Public assistance is one of the most misunderstood parts of the U.S. welfare state.
Public assistance programs are based entirely on need and therefore are means tested.
The rationale for public assistance programs that offer cash, medical, and other assistance are “safety nets”-- the plan is to ensure that people who receive these basic services will not fall below the poverty level.
Federal guidelines help determine the level of aid for the poor. Individual states have the freedom to determine their own safety nets.
Aid to Families with Dependent Children
* AFDC was the most controversial program in the U.S. welfare system.
* Purpose: to maintain and strengthen family life by providing financial assistance to dependent children in need and their families.
* Because AFDC has been used as an ideological battle between liberals and conservatives, recipients have become victimized by:
their own poverty
ideological motives that assault their character.
Evolution of AFDC Program
* Original name was Aid to Dependent Children (ADC)
Part of the Social Security Act of 1935
It was designed to support children by giving assistance to their mothers.
Some critics of ADC felt that it promoted desertion by fathers because assistance was allowed only to families without able-bodied fathers.
1961: Families in which a father was incapacitated or unemployed were allowed to receive assistance. Program was called ADC-UP(Unemployed Parent). Only 25 states adopted it until it became mandatory in 1988.
1962: Name was changed to AFDC to emphasize the family unit.
A notorious chapter in AFDC history was that of the man-in-house-rule: Any women who had an able-bodied man in her house would be terminated from AFDC regardless if he was the father of the children or not. There are stories of midnight raids…
1988: Until 1996 and the enactment of TANF, the Family Support Act (FSA) of 1988 was one of the most important pieces of welfare legislation since the New Deal.
1992: In his presidential campaign, Wiliam Jefferson “Bill” Clinton promised to end welfare as we knew it by instituting a two year cap on AFDC benefits.
1994: The Ultraconservative 104th Congress obviated the possibility of passing any welfare reform bill that included liberal components such as subsidized housing.
1996: Clinton signed Personal Responsibility and Work Opportunity Reconciliation Act of 1996
The PRWORA changed the social service system by replacing AFDC, JOBS, and Emergency Assistance Program with Temporary Aid for Needy Families (TANF) program.
Under PRWORA, there was no federal entitlement to assistance. This meant that the states had the responsibility to provide assistance to persons who were eligible.
Why was this radical bill passed? It was the conservatism of the 104th congress that clearly spurred the bill, the Clinton administration had already paved the way.
Has PRWORA worked?
Both democrats and republicans feel that it has been successful, due to the drop in public assistance caseloads since its implementation. The real measure of success will be to see it performs during a time of recession.