Note: Medicaid is insurance for the poor, different program

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Transcript Note: Medicaid is insurance for the poor, different program

Chapter 13
Domestic Policy
Domestic Policy
Public Policy
• Public policy: an officially expressed purpose or
goal backed by a sanction or reward
– Can be a law, a rule, a regulation, or an order
– There may be rewards for compliance.
– There may be penalties for failure to comply.
Public Policy and Control
• Three government strategies employ different
techniques to get people to follow public policy:
– Promotional
– Regulatory
– Redistributive
Techniques Of Public Control
Promotional: techniques and examples
Techniques Of Public Control
Promotional Policies
• Subsidies and contracts
– Subsidies encourage people to do things they
otherwise could not afford to do.
• $92b in 2007, not including agriculture
• Contracting
– Government purchases billions from private sector
• Both goods and services
– Can set rules to encourage certain outcomes
Regulatory Policies
• Rules backed by penalties
• Regulation takes different forms:
– Police regulation
• Criminal and civil penalties
– Administrative regulation
– Regulatory taxation
• Licensing and taxation of alcohol
– Expropriation
Redistributive Policies
• Manipulate the entire economy, rather than
– Also called “macroeconomic” policies for this reason
• Two types of macroeconomic policy
– Fiscal
– Monetary
Redistributive Policies
• Fiscal policy: the use of taxes and spending to
influence the economy
– Specific taxes can draw on certain sectors of the
economy or certain classes of households.
• Excise tax: tax on specific goods, like gas or
Redistributive Policies
• Monetary policies manipulate the growth of the
entire economy by controlling the availability of
money to banks.
– Role of the Federal Reserve System (the Fed)
Redistributive Policies
• Federal Reserve Bank (the Fed)
– Lends to banks and holds their short-term reserves
– Controls reserve requirement
– Performs open-market operations
• Buys and sells government bonds
– Sets the federal funds rate
• Lower rate when wants to stimulate investment so
that banks can provide cheaper credit
The History of the Social Welfare System
Foundations of the Welfare State
• Social policy before New Deal (1935)
– Limited and mostly local, charities took central role
– Goal often to reform people, make self-sustaining
– Little attention to the systemic causes of poverty
• The Great Depression
– National unemployment at 20 percent
– Too large for charities to manage/handle
– Shattered “only lazy are unemployed and without savings”
Foundations of the Welfare State
• Contributory programs: financed in whole or in
part by taxes or other mandatory contributions
by present or future recipients
– Tend to be popular
– People think of as earned benefits because they have
paid in to these programs
• Social Security, Medicare
– Not to be confused with Medicaid
Foundations of the Welfare State
• Social Security: income for elderly
– Worker and employer pay in from each paycheck.
– Benefits are a function of individual contributions.
• Medicare: health insurance for the elderly
– Worker and employer pay in from each paycheck.
– Benefits are equal for all; *not* tied to contributions.
(Note: Medicaid is insurance for the poor, different program)
Foundations of the Welfare State
• Social Security benefits are indexed.
– Amounts reflect cost of living and inflation.
• Otherwise, benefit would be depleted by those
– Each year, a cost of living adjustment is calculated.
• 2010 and 2011 no increases, resumed in 2012
Foundations of the Welfare State
• Noncontributory programs
– Benefits are based on demonstrated need rather than
any contributions made.
– Programs in this category are widely called “welfare”
or “public assistance.”
• Must demonstrate need via means tests
– The federal poverty line determines whether or not
individuals and families qualify for such benefits.
Social Policy and the Welfare
System Buttress Equality
Public Welfare Programs
Public Welfare Programs
Public Welfare Programs
Foundations of the Welfare State
• Temporary Aid to Needy Families (TANF)
– Several benefits fall under TANF.
• Income, education subsidies/discounts, job training
programs, and others vary by states.
• Medicaid: health insurance for the poor
• Role of states
– Set additional standards for any additional state
benefits above and beyond the federal baseline
Monthly Spending on TANF Benefits
Foundations of the Welfare State
• AFDC/TANF unpopular among voters, elected
officials, and those who do not receive it
• 1996 welfare reform changes
– Five-year lifetime limit (not more than 2 years at a time)
– Work or education/training requirement for adults
• Entire household can lose funds if kids skip school.
– Less cash assistance: 70%+ of TANF funds are *not* cash
or direct payments to recipients)
Note: above practices have been in place over 15 years now.
Welfare Caseload, 1982–2009
Opening Opportunity
• Additional programs and policy designed to promote
equality of opportunity (not outcome)
– Education
− Housing
• Path to economic prosperity
– Grew out of Depression-era focus on targeting factors
causally related to poverty
• Funds most often support, not cover, entire costs for
these efforts.
Opening Opportunity
• Education
– Public education intended to provide workforce with
solid foundation of skills and knowledge
– Traditionally funded by states and local districts
– Federal government still spends billions on
education: financial aid, research grants, supporting
programs in K-12 and college/universities
Education Policies Provide Life Tools
Opening Opportunity
• Goals of employment and training programs
Prepare or retrain workers to fill openings
Create work when private sector cannot
• United States funds these programs at lower
rates relative to education spending
– Schools generally viewed as the locus for training and
job placement
– Government monies for such programs often filtered
into schools
Public Health
• Patient Protection and Affordable Health Care
Act (2010)
– Covers Americans without existing insurance
– Three components:
• State-based insurance exchanges, can’t deny
• Requires uninsured to purchase health insurance
• Subsidies for small businesses and low-income
– Gradual phase in, full implementation by 2020
– 2012, Supreme Court upholds PPAHCA
Public Health
• Other health-related institutions providing
benefits, grants, programs, other support in
medical research, services and information:
– National Institute of Health (NIH)
– Centers for Disease Control (CDC)
– Food and Drug Administration (FDA)
Housing Policies
• Housing policy: spending focus on promoting
homeownership, not housing for poor
Low down-payment terms (3 percent)
Generous repayment terms (30 years+)
Favorable interest rates
Home mortgage interest tax deduction
• Section 8 housing vouchers: discounts rent
– Alternative to public housing projects
• Projects far more expensive to build, maintain, and
Who Gets What from Social Policy?
• The elderly and the middle class receive far
more in benefits per person than do the poor or
• Groups and social policy, public spending
Middle class
Working poor
Unemployed poor
Minorities, women, and children (Of course, minorities and
women fall into all of the above categories as well.)
Who Gets What from Social Policy?
• The elderly
– Social Security and Medicaid
• Have lifted many of the elderly out of poverty
– In 1959, 35 percent of elderly were poor
– In 2008, 9.7 percent were poor
• Medicaid is extremely good medical insurance.
Federal Social Spending, 1962–2015
Who Gets What from Social Policy?
• Why are programs for the elderly so strong?
Seen as deserving
Vote in very high percentages
Powerful lobbying arm (AARP)
Who Gets What from Social Policy?
• Middle class
– “Shadow welfare state”
• Tax expenditures for employer-provided benefits
• Mortgage interest deductions
The Middle Class Benefits from Social Policies
Who Gets What from Social Policy?
• The working poor
– Earn too much to qualify for welfare programs
– Highly unlikely to own a home
– Jobs they hold provide very limited, if any, health care or
retirement plan options
• Part-time jobs, even if hold several of them, most often
do not make such benefits available or affordable
– Two programs may apply for this group:
• Earned Income Tax Credit, and Supplemental Nutrition
Assistance Program (food stamps)
Who Gets What from Social Policy?
• Unemployed poor (and some working poor)
Temporary Aid to Needy Families (TANF)
Programs typically aimed at helping children
Note: Many working poor who earn very little qualify for the above
Who Gets What from Social Policy?
Who Gets What from Social Policy?
• Federal poverty definitions (2010)
– 1 parent, 2 children, annual income <$18k
– 2 adults, 2 children, annual income < $22k
• 2010 census: poverty by household type
– 32% of all single-mother households in poverty
– 16% of all single-father households in poverty
– 6% of all two-adult households in poverty
• 22% of all children are poor
Who Gets What from Social Policy?
• Poverty rates by race/ethnicity (2010 census)
10% of all whites in the United States are poor
12% of all Asian Americans in the U.S. are poor
27% of all Latinos in the U.S. are poor
27% of all African Americans in the U.S. are poor
More data on poverty and demographics:
Public Opinion Poll
Should public schools at the K-12 level remain publicly
funded through state and local taxes, or should public
schools be eliminated such that all students/families
pay tuition to the school of their choice (and price
a) Keep K-12 public education funded by taxpayers
b) End public education funding; all students/families pay
tuition to attend school K-12
Public Opinion Poll
Should welfare benefits—in terms of programs and
direct payments to recipients—be the same in all
a) Yes, all states should address poverty in the same
way, using only federal funds and programs.
b) No, states should be able to address poverty in a
manner they think is appropriate, adding statelevel programs and funds if they wish to do so.
Public Opinion Poll
Should people who decide not to buy health
still receive medical treatment in the event of an
a) Yes, people without insurance should still get
medical care in the event of an emergency.
b) No, people who decide not to pay for
insurance should not get medical services.
Public Opinion Poll
Should the federal government spend more to make
college education more affordable?
a) Yes, government should spend more on college
education to make it more affordable.
b) No, keep spending as is, no increase or decrease.
c) Government should cut spending on college
education, cutting current levels.
Public Opinion Poll
Should the federal government encourage
marriage as
a means to reduce poverty?
a) Yes, the government should encourage
marriage to diminish national poverty rates.
b) The government should stay out of such
personal matters and should neither
encourage or discourage marriage
Chapter 13: Domestic Policy
• Quizzes
• Flashcards
• Outlines
• Exercises