Social Policy

1. Social Policy • Social insurance = largest part of welfare state • Social Security, Medicare, Unemployment, Worker’s compensation • Benefits working middle class; payroll tax contributions; “deserving”; indexed • Public assistance • Food stamps, housing, child welfare • Selective and means-tested; not indexed; controversial • Education • Private welfare state = relatively large • Health insurance, pensions from employer • Government-subsidized through tax code, exemptions • More inequitable than public programs • Spending on social insurance, public assistance, and state-subsidized private welfare expanded dramatically since WWII • Still comparatively small (Figure 10.1) • Americans enjoy fewer social rights (e.g., right to health care)

2. Historical Welfare State • Early American welfare state= extended social protection to veteran soldiers and mothers (following Civil War) • (1880-1910) ¼ of federal budget spent on pensions for Civil War veterans and dependents • Progessive Era “maternalist” welfare state developed to promote motherhood • Income assistance to single, poor mothers who proved “worthiness”; contingent on behavior • Conform to traditional gender roles (i.e., full-time child-centered domesticity) • Unwed mothers often excluded • Many states, localities excluded black mothers (especially in South) • Gender and race roles inscribed in social policy

3. New Deal and Beyond • Expansionof welfare state • Unemployment, poverty, despair  political action  federally funded jobs and social welfare • Reform resisted by corporate community • Social Security Act (1935) • Pensions, unemployment compensation for workers; public assistance to elderly, blind; for poor, single mothers -- Aid to Dependent Children (ADC) • Reinforced conservative nature of welfare state • Localism (states set benefit levels, eligibility requirements) • Benefits set low • Distinction between “deserving” and “undeserving” = social assistance programs (payroll taxes) vs. public assistance programs (general fund) • Gender inequalities (men more likely to qualify for social insurance) • Racial content (advantaged whites, excluded African Americans); clear example, GI Bill • Fair Labor Standards Act (1938) established minimum wage and 40 hour work week

4. New Deal and Beyond, cont. • WWII halted social reform; business community, conservative Congress resisted new initiatives • (1946) Full employment, (1949) National Health Insurance, Truman’s Fair Deal (extending New Deal) all defeated • Unions, liberals used collective bargaining to gain pensions, health insurance, unemployment protection  private welfare system • Employer-based benefits= workers dependent for social protection (health insurance, pensions) on firms; tied workers to employers • Divided workers from each other = workers in corporate sector had less stake in improving, expanding programs for other workers, poor • Businesses offered tax incentives to subsidize employer-based welfare • Limited public benefits encouraged reliance on private, corporate welfare plans • Private plans act as brake on extension of public welfare state

5. New Poverty • Increasing numbers living in poverty (1960s) • African Americans in urban ghettos • Greater discrimination than earlier groups of immigrants • Postindustrial economy  increasing importance of education, skills; factories relocated to suburbs; service sector jobs don’t pay living wage • Women • (present) 1/3 of all female-headed households in poverty; ½ of all families in poverty • Women earn lower wages; some need to stay home to care for children • Children • (present) poverty rate among children around 20%; 3x’s higher than in Europe • Welfare state generationally skewed (most benefits flow to elderly through expensive programs: Medicare and Social Security) • Poverty today • Good and bad jobs growing at expense of blue collar jobs in middle • Service sector = low wages, no benefits, irregular employment • Value of federal minimum wage declined (Table 10.1) • See page 331, Responsibility for Poverty: What Do You Think?

6. Great Society Program • Johnson declared War on Poverty (Great Society = free of hunger and privation) • Health insurance (Medicare, Medicaid) for aged, poor; education for disadvantaged (Head Start, Upward Bound); Job-training (Job Corps); Housing and urban development (Model Cities) • Goal = enhance opportunities for poor • Undermined by social unrest, war in Vietnam • Conservatives = War on Poverty failed, harmful • Great Society polarized electorate along social insurance/public assistance and race lines • Politicians exploited tensions using “welfare” as code word to appeal to some voters’ fears over crime, taxes, morality, and race (peaked during Reagan administration) • War on Poverty successes • Reduced poverty from 19% (1964) to 12% (1979) • Reduced malnutrition, increased access to medical care, improved housing, expanded education

7. Reagan to Clinton • Reagan reduced size, scope of welfare state • Slowed spending; slashed Great Society • Left social insurance intact • Put welfare state on defensive • Problem of poverty = increasing poor’s resources  changing the poor’s behavior; blaming circumstances on inadequacies of economy  perverse incentives of welfare state • Clinton • Abandoned campaign promise to invest in domestic programs • Supported welfare “reform” with Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) (1996) • Replaced AFDC with Temporary Assistance to Needy Families (TANF) • States got fixed sums in form of block grants; Two year limits; lifetime limit of 5 years • Welfare rolls declined with resurgent economy (1993); grew in wake of Great Recession (2008)

8. Bush to Obama • Expanded federal role in public education • No Child Left Behind (NCLB) (2002); sought to narrow gap between advantaged and disadvantaged; underfunded, controversial • Medicare Part D (2004); prescription drug coverage to Medicare recipients • Supported by pharmaceutical manufacturers (no price controls, price regulation, and negotiation to secure lower prices) • Increased spending on children’s health • State Children’s Health Insurance Plan (SCHIP) expanded federal Medicaid spending so states could provide health insurance to children whose families met income requirements • Healthbecame fastest growing area of welfare state; US top in expenditures on health (Figure 10.2) • Obama’s Affordable Health Care Act (AHCA) (2010) • Employers (> 50 workers) must provide affordable insurance; individuals required to have health insurance; state-based insurance marketplaces called exchanges; insurers unable to deny applicants, impose lifetime limits; improved medicare prescription drug benefit; children on parent’s policies until 26 • Hugely controversial; massive lobbying by pharmaceutical industry, health insurance companies; successfully blocked public option

9. Conclusion • Conservative = stabilizes corporate capitalist system; alleviates but does not correct basic structural inequalities; reinforces market by making inequalities, insecurities tolerable • Egalitarian = offers more egalitarian alternative to market; can improve workers’ standards of living making them less dependent on wages, thus reducing power of employers; can spread to other activities, progressively infringing on areas operated on market principles and ability to pay • US welfare system exhibits both = extended protections to vulnerable groups, but in ways that reinforce divisions between workers and poor, whites and blacks, men and women • Question of poverty: economic growth alone cannot reduce poverty; only government programs in tandem with successful economy • Goals of welfare state(?): support private economy to increase economic growth; compensate for inequalities; provide security against hazards; enhance and equalize opportunities; reduce income and wealth gaps…what do you think?