Chapter 8 – Expenditure Programs for the Poor. Public Economics. Quick Look at Welfare Spending. “ Welfare” in the United States is a patchwork of dozens of different programs. All welfare programs are means-tested – only individuals with sufficiently low income are eligible.
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Open-ended entitlement – anyone who qualifies gets AFDC.
No time limits – could be on program indefinitely
No work requirements
Cost sharing by federal and state governments – open ended costs.
State determines benefit levels subject to broad federal guidelines
High tax rates on earned income
No “entitlement” – limited funding.
Time limited for at most 5 years
Block grant to states – costs to federal government are not open ended.
States have even more control of the design of the program
States have option to lower tax rates on earned incomeAFDC/TANF differences