Transcript Chapter 17: Domestic Policy

Chapter 17: Domestic Policy
Part II (pp. 631-648)
Social Welfare Policies Today:
Income Security Programs
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Protect people against loss of income due to
retirement, disability, unemployment or deal or
absence of family breadwinner
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Non-means-based programs: program where benefits
are provided irrespective of the income or means of
recipients
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Old age, survivors, and disability insurance
Social Security
Unemployment
Means-tested programs: Income security program
intended to assist those whose incomes fall below a
designated level
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Supplemental Security Income
TANF
Family and Child Support Act
Social Security
• Current workers pay a tax that goes directly
towards providing benefits for retirees
• 2004 7.65% on all wages up to $87,900
– Regressive tax: captures larger proportions of
incomes from lower- and middle-income individuals
– Flat tax: everybody pays the same fraction of income
in taxes (i.e. 5% on all incomes)
– Progressive tax: tax where lower-income entities pay
a lower fraction of their income in taxes than do
higher-income entities.
Here's how it works:
Let's say the tax is $800 dollars
per year. Under this Regressive
Tax system, that's $800 for
everyone, regardless of their
income.
If you have a part-time job and
earn $2,600 per year, an $800 tax
bill means you're paying about 30%
of your income in taxes.
If you earn $8,000 a year working
at the local movie theater, you get
to watch all the latest flicks, but
you're not going to be buying a
yacht or retiring anytime soon. $800
in taxes means you're paying 10%
of your income in taxes.
If your cousin with the business
degree earns $80,000 a year at
some big company in town, $800
translates to just 1% of her income.
Social Security
• Strains on the system:
– graying” of America
– Baby Boomers reaching retirement age
– Lower birth rate
– Increased life expectancies
• Possible solutions
– Privatization
– Cut benefits
Welfare Reform of 1996
• Personal Responsibility and Work
Opportunity Reconciliation Act of
1996
– Required single mothers with a child over
five years of age to work within two years of
receiving funds
– Included a provision that unmarried mothers
under the age of 18 be required to live with
an adult and attend school in order to receive
welfare benefits
Welfare Reform of 1996
• Temporary Assistance for Need Families
– Guidelines for states to follow
• Recipients participating in work activities
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Employment
Job-readiness assistance
Community service
Education
• “self-sufficiency”
Food Stamp Program
• Initial program was an effort to
expand the domestic market for farm
commodities -1939-1943
– Provided the poor with the ability to buy
more food, thus increasing demand for
American agricultural produce
– Average participant’s monthly
disbursement: $93 in food stamps
The Effectiveness of Income
Security Programs
• Entitlement programs
– Income security programs to which all those meeting
eligibility criteria are entitled
– Spending for such programs is mandatory
•
•
Funds must be provided for them unless laws creating
the programs are changed
Difficult to control spending for this reason
–
Discretionary Spending: expenditures that Congress can
choose to make.
Health Care
– Medicare
• Administered by Department of Heath and
Human Services
• Part A: automatic at age 65
• Part B: optional; covers payment for items not
covered by part A
• Covers persons receiving Social Security
• Baby Boomers – strain on system
Health Care
– Medicaid
• Provides comprehensive health care to all who
qualify as needy
• Jointly financed by national and state governments
• Some variation by state in terms of who is covered
Health Care
• Affordable Care Act (2010)
– Aka Obama Care
– Most significant overhaul to health care since
Medicare and Medicaid
– Prohibits insurers from denying coverage to
individuals with pre-existing conditions
– Minimum standards for health insurance
policies
– All people to be covered by insurance
– Upheld by the Supreme Court in 2012
Cost of Health Care
• Medicare and Medicaid vastly exceeded
early estimates
• Resulted in ballooning costs of health care
– People are living longer
– Range of practices has increased
Public Education
• 2003: national, state, and local
governments in U.S. collected more than
$400 billion to spend on public education
(K-12)
– 48.7% from state governments
– 42.8% from local governments
– 8.5% from the national government
• Great variation across states in spending
per student
Public Education
• Federal aid to education
– Goals 2000
– No Child Left Behind
• Inequality in spending among school
districts
• Voucher plans
– Supreme Court upheld use in Zelman v.
Simmons-Harris
Public Education: Voucher
Plans and Charter Schools
• Charter Schools
– Permit some institutions (those with
charters) to operate beyond the reach of
school boards
– Break the monopoly exercised by
centralized school boards and allow
students as well as parents to exercise
choice