Chapter 18 Social Safety Nets SOCIAL WELFARE A

Chapter 18: Social Safety Nets

SOCIAL WELFARE A social welfare state is a society with a set of government programs that protect the minimum standards of living of families and individuals. All rich democracies have social welfare states.

• Key Ideas • Some safety net programs are administered directly from the federal government (ex. Social Security) and others are jointly administered from state and federal programs (ex. Medicaid and unemployment) • Entitlements: payments are made to people who meet certain eligibility requirements

Medicare, Medicaid, and CHIP: Three health insurance programs — Medicare, Medicaid, and the Children’s Health Insurance Program (CHIP) — together accounted for 22 percent of the budget in 2013, or $772 billion. • Nearly two-thirds of this amount, or $498 billion, went to Medicare, which provides health coverage to around 54 million people who are over the age of 65 or have disabilities. • The remainder of this category funds Medicaid and CHIP, which in a typical month provide health care or long-term care to about 70 million low-income children, parents, elderly people, and people with disabilities. Both Medicaid and CHIP require matching payments from the states. •

• Safety net programs p. 2 • About 12 percent of the federal budget in 2013, or $398 billion, supported programs that provide aid (other than health insurance or Social Security benefits) to individuals and families facing hardship. • Spending on safety net programs declined in both nominal and real terms between 2012 and 2013 as the economy continued to improve.

• Safety net programs • About 12 percent of the federal budget in 2013, or $398 billion, supported programs that provide aid (other than health insurance or Social Security benefits) to individuals and families facing hardship. • Spending on safety net programs declined in both nominal and real terms between 2012 and 2013 as the economy continued to improve.

• Safety net programs p. 3 1) the refundable portions of the Earned Income Tax Credit and Child Tax Credit, which assist low - and moderate-income working families through the tax code; 2) programs that provide cash payments to eligible individuals or households, including Supplemental Security Income for the elderly or disabled poor and unemployment insurance;

• Safety net programs p. 4 3) various forms of in-kind assistance for low-income families and individuals, including SNAP (food stamps), school meals, low-income housing assistance, child care assistance, and assistance in meeting home energy bills; 4) various other programs such as those that aid abused and neglected children.

Safety net programs p. 5 Such programs keep millions of people out of poverty each year. • • A CBPP analysis shows that government safety net programs kept some 41 million people out of poverty in 2012. • Without any government income assistance, either from safety net programs or other income supports like Social Security, the poverty rate would have been 29. 1 percent in 2012, nearly double the actual 16 percent

• Means-Tested • Benefits are distributed on the basis of need • Funded through general income tax revenues, rather than by payroll taxes • Food stamps • TANF=Temporary Assistance to Needy Families

Social Security • Social insurance • benefits based on contributions • Social Security • Funded by payroll tax • Due to an aging population, Social Security will run a deficit unless reforms are made.

Social Security cont… • Democrats favor small reforms. • Republicans favor a major overhaul, specifically privatizing individual retirement funds.

Medicare • Entitlement program for retirees and the disabled • Prescription drug benefit began in 2006 • One of the most costly federal programs • Payments are a recurring problem

Do Social Insurance Programs Work? • Successes • Problems

• Means-Tested Programs (Welfare) • Unpopularity • Food of previous AFDC program Stamps • Medicaid • Supplemental Security Income • The Earned Income Tax Credit

Welfare Block Grants • Results • Pro=welfare state • Con=About roles have diminished in every 20% of those who left the welfare roles between 1997 -2001 returned to them. =Because pay for entry-level positions is so low, very few former welfare recipients have been able to rise above the poverty line.

How the American Welfare State Compares with Others • All modern capitalist countries have social welfare states. • Welfare states range from low-benefit, targeted types (minimal or liberal welfare states) to high-benefit, universal types (developed or social democratic welfare states). • The United States is very close to being at the minimum end of the spectrum.

• Why the American Welfare State Is Different p. 2 Compared with other rich democracies, the American welfare state: • is much less costly • covers fewer people • favors the elderly • is less redistributive • requires less of private employers • does not include universal healthcare

Why the American Welfare State Is Different p. 3 • Constitutional rules • Racial and ethnic diversity • Political culture • Business power • Weak labor unions