Welfare: The Concise Encyclopedia of Economics. The U. S. The dozens of programs that make up the “system” have different (sometimes competing) goals, inconsistent rules, and over- lapping groups of beneficiaries. Responsibility for administering the various programs is spread throughout the executive branch of the federal government and across many committees of the U. S. Responsibilities are also shared with state, county, and city governments, which actually deliver the services and contribute to funding. The six programs most commonly associated with the “social safety net” include: (1) Temporary Assistance for Needy Families (TANF), (2) the Food Stamp Program (FSP), (3) Supplemental Security Income (SSI), (4) Medicaid, (5) housing assistance, and (6) the Earned Income Tax Credit (EITC). The federal government is the primary funder of all six, although TANF and Medicaid each require a 2. The first five programs are administered locally (by the states, counties, or local federal agencies), whereas EITC operates as part of the regular federal tax system. Outside the six major programs are many smaller government- assistance programs (e. Special Supplemental Food Program for Women, Infants and Children . The 1. 99. 6 law replaced Aid to Families with Dependent Children (AFDC) with TANF. Briefly, two key forces are changing the basic relationship between the government and welfare recipients in all programs. Does Welfare Help the Poor? David Henderson Economists believe that people tend to make decisions that benefit themselves If. Home // Public Interest Directorate // Women's Programs Office // Programs & Projects // Making 'welfare to work' really work EMAIL PRINT Making 'welfare to work' really work. Inside the War on Poverty: The Impact of Food Stamps on Birth Outcomes w14282 Betsey Stevenson Justin Wolfers Economic Growth and Subjective Well-Being. ![]() Welfare Reform Has Led to More Work but Less Education Welfare reforms have reduced both the probability that women aged 21-49 will attend high school and that those aged 24-49 will attend college, by 20-25 percent. A crowd of nearly 150 people attended the briefing, 'Is Welfare Reform Working? The Impact of Economic Growth and Policy Changes.' The event. SSI and food stamps were also affected, but to a much lesser extent. Key Programs The accompanying figures summarize trends in the coverage and expenses of the six major federal safety- net programs over the past three decades. Figure 1 shows the percentage of the American population receiving benefits from each program, and Figure 2 presents the share of federal expenditures spent on each program. The bars in Figure 1 also plot the percentage of Americans classified as being in poverty. In addition to highlighting the evolution of these U. S. The program also significantly funds job training and child care as a means to discourage welfare dependency and encourage work. The origins of TANF are in the Social Security Act of 1. Aid to Dependent Children (ADP) program. ADP enabled state governments to help single mothers who were widowed or abandoned by their husbands. It was originally designed to allow mothers to stay at home and take care of their children, providing cash benefits for the basic requirements of food, shelter, and clothing. The program was expanded in the 1. Some countries run conditional cash transfer welfare programs where payment is conditional on behaviour of the recipients. Welfare systems Australia Prior to 1900 in Australia, charitable assistance from benevolent societies, sometimes with financial. This expansion coincided with renaming the program Aid to Families with Dependent Children. While AFDC was principally a federal program managed by the Department of Health and Human Services, it was administered through state- run welfare offices. Indeed, states were responsible for organizing the program, determining benefits, establishing income and resource limits, and setting actual benefit payments. With relatively little flexibility, an AFDC program in New York City looked a lot like its counterpart in Reno, Nevada, apart from differences in the maximum amount each state paid to a family for assistance. Funding for AFDC was shared between the federal and state governments, with the feds covering a higher portion of AFDC benefit costs in states with lower- than- average per capita income. As with many other welfare programs, AFDC’s costs were not capped because the program was an “entitlement”—meaning that qualified families could not be refused cash assistance. By the early 1. 99. AFDC. Although the average monthly benefit in 1. In response to this dependency, in 1. Congress passed and President Bill Clinton signed the Personal Responsibility and Work Opportunity Reconciliation Act, which replaced AFDC with TANF. Under the new program, the federal government eliminated the entitlement to cash welfare, placed limits on the length of time families could collect benefits, and introduced work requirements. By law, a family cannot receive TANF benefits for more than a lifetime limit of five years, cumulative across welfare spells. Regarding work requirements, TANF mandated that at least 5. Together, these activities must account for thirty hours per week for a single parent. Recipients who refuse to participate in work activities must be sanctioned, resulting in a loss of cash benefits. Enforcement of sanctions could include immediately suspending all cash payments, stopping support only after multiple episodes of noncompliance, or only partially reducing grants to families who fail to cooperate. States could, and in fact did, introduce more stringent requirements for families to work or participate in educational activities to qualify for cash payments. TANF cemented the primary emphasis on getting welfare recipients into jobs. Figure 2 Program Spending as a Percentage of Federal Outlays. Figures 1 and 2 reveal that growth in neither costs nor enrollments motivated the passage of welfare reform in 1. Program expenditures have accounted for less than 3 percent of the federal budget since 1. The caseload remained relatively stable until the mid- 1. After welfare reform, however, the welfare caseload and welfare spending as a percentage of government spending dropped sharply. The Food Stamp Program, authorized as a permanent program in 1. After 1. 97. 4, Congress required all states to offer the program. Recipients use coupons and electronic benefits transfer (EBT) cards to purchase food at authorized retail stores. There are limitations on what items can be purchased with food stamps (e. Recipients pay no tax on items purchased with food stamps. The federal government is entirely responsible for the rules and the complete funding of FSP benefits under the auspices of the Department of Agriculture’s Food and Nutrition Service (FNS). State governments, through local welfare offices, have primary responsibility for administering the Food Stamp Program. They determine eligibility, calculate benefits, and issue food stamp allotments. Welfare reform imposed work requirements on recipients and allowed states to streamline administrative procedures for determining eligibility and benefits. Childless recipients between the ages of eighteen and fifty became ineligible for food stamps if they received benefits for more than three months while not working. According to Figure 1, the FSP caseload has included between 6 and 1. U. S. Welfare reform caused a decline in the FSP caseload percentage. Supplemental Security Income, authorized by the Social Security Act in 1. Families can also receive payments to support disabled children. Survivor's benefits for children are authorized under Title II of the Social Security Act, not Title XVI, and are, therefore, not part of the SSI program. Although one cannot receive SSI payments and TANF payments concurrently, one can receive SSI and Social Security simultaneously. First, the legislation set up procedures to help ensure that SSI payments are not made to prison inmates. Second, the legislation eliminated benefits to less- disabled children, particularly children with behavioral problems rather than physical disorders. Finally, new immigrants were deemed ineligible for benefits prior to becoming citizens. Medicaid became law in 1. Social Security Act, to assist state governments in providing medical care to eligible needy persons. Medicaid provides health- care services to more than 4. Medicaid is the largest government program providing medical and health- related services to the nation’s poorest people and the largest single funding source for nursing homes and institutions for mentally retarded people. Within federal guidelines, each state government is responsible for designing and administering its own program. Individual states determine persons covered, types and scope of benefits offered, and amounts of payments for services. Federal law requires that a single state agency be responsible for the administration of the Medicaid program; generally it is the state welfare or health agency. The federal government shares costs with states by means of an annually adjusted variable matching formula. The Medicaid program has more participants than any other major welfare program. More than 1. 7 percent of the population received Medicaid benefits in 2. Spending on Medicaid has risen steadily as a fraction of the federal budget, increasing from approximately 2 percent in 1. Total outlays for the Medicaid program in 2. Medicaid beneficiaries averaged $4,2. Housing assistance covers a broad range of efforts by federal and state governments to improve housing quality and to reduce housing costs for lower- income households. The Department of Housing and Urban Development (HUD) and the Federal Housing Administration (FHA) administer most federal housing programs. Under current programs, each resident pays approximately 3. In terms of welfare policy, there are two principal types of housing assistance for low- income families: subsidized rent and public housing. The federal government has provided rental subsidies since the mid- 1. HUD Section 8 voucher program. Local governments commonly provide for subsidized housing through their building authority in that they require a portion of new construction to be made available to low- income families at below- market rents. Public housing (the actual provision of dwellings) is almost exclusively a federal program administered by local public housing agencies (PHAs), not private owner- managers. In contrast to the mid- 1. Earned Income Tax Credit, enacted in 1. Americans with low earnings. The tax credit increases family income by supplementing earnings up to a fixed level. The program was initially designed to offset the impact of Social Security taxes on low- income individuals and to encourage individuals to seek employment rather than rely on welfare benefits. Because EITC is part of the regular federal income tax system, receiving benefits is private, unremarkable, and without stigma. In 2. 00. 4, the EITC paid out $3. TANF and food stamps. EITC is one of the few programs that effectively reach the eligible population. Analysis of EITC claims in 1. Social programs in the United States. The Social Security Administration, created in 1. Federal and state welfare programs include cash assistance, healthcare and medical provisions, food assistance, housing subsidies, energy and utilities subsidies, education and childcare assistance, and subsidies and assistance for other basic services. Private provisions from employers, either mandated by policy or voluntary, also provide similar social welfare benefits. The programs vary in eligibility requirements and are provided by various organizations on a federal, state, local and private level. They help to provide food, shelter, education, healthcare and money to U. S. The Social Security system is sometimes considered to be a social aid program and has some characteristics of such programs, but unlike these programs, social security was designed as a self- funded security blanket - so that as the payee pays in (during working years), they are pre- paying for the payments they'll receive back out of the system when they are no longer working. Medicare is another prominent program, among other healthcare provisions such as Medicaid and the State Children's Health Insurance Program. Congressional funding. Some of these programs include funding for public schools, job training, SSI benefits and medicaid. GDP or another $1. OECD estimates. In these estimates of private social welfare expenditures, Hacker included mandatory private provisions (less than 1% of GDP), subsidized and/or regulated private provisions (9- 1. GDP), and purely private provisions (3- 4% of GDP). Aid to veterans, often free grants of land, and pensions for widows and handicapped veterans, have been offered in all U. S. Following World War I, provisions were made for a full- scale system of hospital and medical care benefits for veterans. By 1. 92. 9, workers' compensation laws were in effect in all but four States. These state laws made industry and businesses responsible for the costs of compensating workers or their survivors when the worker was injured or killed in connection with his or her job. Retirement programs for mainly State and local government paid teachers, police officers, and fire fighters. All these social programs were far from universal and varied considerably from one state to another. Prior to the Great Depression the United States had social programs that mostly centered around individual efforts, family efforts, church charities, business workers compensation, life insurance and sick leave programs along with some state tax supported social programs. The misery and poverty of the great depression threatened to overwhelm all these programs. The severe Depression of the 1. Federal action almost a necessity, as neither the States and the local communities, businesses and industries, nor private charities had the financial resources to cope with the growing need among the American people. Beginning in 1. 93. Federal Government first made loans, then grants, to States to pay for direct relief and work relief. After that, special Federal emergency relief like the Civilian Conservation Corps and other public works programs were started. In 1. 93. 5, President Franklin D. Roosevelt's administration proposed to Congress federal social relief programs and a federally sponsored retirement program. Congress followed by the passage of the 3. Social Security Act, signed into law August 1. This program was expanded several times over the years. War on Poverty and Great Society programs (1. Still, most states offer basic assistance, such as health care, food assistance, child care assistance, unemployment, cash aid, and housing assistance. After reforms, which President Clinton said would . The new program is called Temporary Assistance for Needy Families (TANF). Reauthorization of TANF was not accomplished in 2. TANF block grants were extended as part of the Claims Resolution Act of 2. Temporary Aid for Needy Families for details). Following these changes, millions of people left the welfare rolls (a 6. The late 1. 99. 0s were also considered an unusually strong economic time, and critics voiced their concern about what would happen in an economic downturn. Roosevelt pushed Congress to establish the Civilian Conservation Corps. The Social Security Act was passed on June 1. The bill included direct relief (cash, food stamps, etc.) and changes for unemployment insurance. Aid to Families With Dependent Children (AFDC) was established. Johnson's. War on Poverty is underway, and the Economic Opportunity Act was passed. Retirement Insurance Benefits (RIB), also known as Old- age Insurance Benefits, are a form of social insurance payments made by the U. S. Social Security Administration paid based upon the attainment old age (6. Social Security Disability Insurance (SSD or SSDI) is a federal insurance program that provides income supplements to people who are restricted in their ability to be employed because of a notable disability. Unemployment insurance, also known as unemployment compensation, provides for money, from the United States and the state collected from employers, to workers who have become unemployed through no fault of their own. The unemployment benefits are run by each state with different state defined criteria for duration, percent of income paid, etc. Nearly all require the recipient to document their search for employment to continue receiving benefits. Extensions of time for receiving benefits are sometimes offered for extensive work unemployment. These extra benefits are usually in the form of loans from the federal government that have to be repaid by each state. General welfare. Health care facilities are largely owned and operated by the private sector. Health insurance in the United States is now primarily provided by the government in the public sector, with 6. Having some form of comprehensive health insurance is statutorily compulsory for most people lawfully residing within the US. Medicare in the United States somewhat resembles a single- payer health care system but is not. It is a means- tested program that is jointly funded by the state and federal governments, and is managed by the states. Medicaid is the largest source of funding for medical and health- related services for people with limited income in the United States. The Children's Health Insurance Program (CHIP) is a program administered by the United States Department of Health and Human Services that provides matching funds to states for health insurance to families with children. Public education is managed by individual states, municipalities and regional school districts. As in all developed countries, primary and secondary education is free, universal and mandatory. Parents do have the option of home- schooling their children, though some states, such as California (until a 2. Experimental programs give lower- income parents the option of using government issued vouchers to send their kids to private rather than public schools in some states/regions. As of 2. 00. 7, more than 8. Public schools commonly offer after- school programs and the government subsidizes private after school programs, such as the Boys & Girls Club. While pre- school education is subsidized as well, through programs such as Head Start, many Americans still find themselves unable to take advantage of them. Some education critics have therefore proposed creating a comprehensive transfer system to make pre- school education universal, pointing out that the financial returns alone would compensate for the cost. Tertiary education is not free, but is subsidized by individual states and the federal government. Some of the costs at public institutions is carried by the state. The government also provides grants, scholarships and subsidized loans to most students. Those who do not qualify for any type of aid, can obtain a government guaranteed loan and tuition can often be deducted from the federal income tax. Despite subsidized attendance cost at public institutions and tax deductions, however, tuition costs have risen at three times the rate of median household income since 1. Some Democratic politicians and political groups have also proposed to make public tertiary education free of charge, i. Department of Agriculture, but benefits are distributed by the individual U. S. It is historically and commonly known as the Food Stamp Program, though all legal references to . To be eligible for SNAP benefits, the recipients must have incomes below 1. The eligibility requirement is a family income below 1. U. S. Poverty Income Guidelines, but if a person participates in other benefit programs, or has family members who participate in SNAP, Medicaid, or Temporary Assistance for Needy Families, they automatically meet the eligibility requirements. The Child and Adult Care Food Program (CACFP) is a type of United States federal assistance provided by the U. S. Department of Agriculture (USDA) to states in order to provide a daily subsidized food service for an estimated 3. W6% Net. Income. 70- 2. Source: Congressional Budget Office Study. Market Income = All wages, tips, incomes etc. Federal Transfers = all EITC, CTC, medicaid, food stamps (SNAP), Social Security, SSI etc. Average tax rate includes all Social Security, Medicare, income, business income, excise, etc. Net Federal taxes paid in dollars. Percent of all federal taxes paid. The poorest 2. 0% of American households earn a before- tax average of only $7,6. Social programs increase those households' before- tax income to $3. Social Security and Medicare are responsible for two- thirds of that increase. By creating a society with less poverty and less insecurity, he argues, we move closer to creating a nation of shared prosperity that works to the advantage of all. Thus, his research suggests, life satisfaction (or . Between 1. 93. 2 and 1. American liberalism dominated U. S. Drug testing in order for potential recipients to receive welfare has become an increasingly controversial topic.
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