Transcript American Political Economy

Social Policy
0 Programs to cushion risk, provide citizens with security from market
0 Social insurance: largest part of welfare state
0 Age, ill health, unemployment, death of spouse
0 Social Security, Medicare, Unemployment insurance, Worker’s compensation
0 Benefits working middle class; contributions workers make in form of payroll
taxes; “deserving”; benefits keep up with cost of living (indexed)
0 Public assistance programs
0 Selective and means-tested; eligible to those whose income/wealth below set
limit; not indexed; more controversial
0 Food stamps, housing assistance, child welfare
0 Education
0 Private welfare state; relatively large
0 Health insurance, pensions from employer
0 Government subsidizes through tax code, exemptions
0 More inequitable than government programs in who benefits and by how
much
0 Spending on social insurance, public assistance programs, and statesubsidized private welfare has expanded dramatically since WWII
0 Still comparatively small (Figure 10.1)
0 Americans enjoy fewer and less general social rights (e.g., right to health care)
Historical Welfare State
0 Early American welfare state extended social protection to
veteran soldiers and mothers (following Civil War)
0 (1880-1910) ¼ of federal budget spent on pensions for Civil War
veterans and dependents
0 Later “maternalist” welfare state developed aimed at promoting
motherhood
0 Product of Progressive Era
0 Provided income assistance to single, poor mothers who had to
prove “worthiness”; contingent on behavior of mothers
0 Price of accepting mothers’ pensions was state regulation over lives
of women to ensure they conformed to traditional gender roles (i.e.,
full-time child-centered domesticity)
0 Unwed mothers often excluded
0 Many states and localities excluded black mothers (especially in South)
0 Example of how roles (gender and race) inscribed in social policy
New Deal and Beyond
0 Most dramatic expansion of welfare state (Great Depression)
0 Staggering unemployment (1/4 workforce jobless); Unemployment 
poverty and despair; political action prompted FDR administration to offer
federally funded jobs and social welfare
0 Social reform to address unrest and keep market economy (capitalism)
functioning; resisted by corporate community
0 Social Security Act (1935)
0 Pensions and unemployment compensation for workers; public assistance to
elderly and blind; for poor, single mothers -- Aid to Dependent Children (ADC)
0 Reinforced conservative nature of welfare state
0 Continued tradition of localism (states set benefit levels and eligibility
requirements)
0 Benefits set quite low
0 Institutionalized distinction between “deserving” and “undeserving”; social
assistance programs (financed through payroll taxes) vs. public assistance
programs (financed through general fund)
0 Reinforced gender inequalities (men more likely to qualify for social
insurance)
0 Profound racial content (advantaged whites and excluded African
Americans); clear example, GI Bill
0 Fair Labor Standards Act (1938) established minimum wage and 40
hour work week
New Deal and Beyond, cont.
0 WWII halted social reform
0 After war, resurgent business community and conservative Congress
resisted new initiatives; supporters put on defensive
0 (1946) Full employment policy, (1949) National Health Insurance bill,
Truman’s Fair Deal (extending New Deal) all defeated
0 Unions, liberals used collective bargaining to gain pensions, health
insurance, unemployment protection  private welfare system
0 Employer-based benefits made workers dependent for social protection
(health insurance, pensions) on firms; tied workers to employers
0 Divided workers from each other = workers in corporate sector had less stake
in improving, expanding programs for other workers and poor
0 Businesses offered tax incentives to subsidize employer-based welfare
plans
0 Limited public benefits encouraged reliance on private, corporate welfare
plans
0 Private plans act as brake on further extension of public welfare state
0 New Deal did not go forward under Truman or back under Eisenhower
New Poverty
0 (1960s) Increasing numbers living in poverty despite booming economy
0 Poor African Americans in urban ghettos
0 Faced greater discrimination than earlier groups of immigrants
0 Postindustrial economy  increasing importance of education, skills; factories
relocated to suburbs; service sector jobs don’t pay living wage
0 Women
0 (present) 1/3 of all female-headed households in poverty; ½ of all families in poverty
0 Women earn lower wages; some need to stay home to care for children
0 Children
0 (present) poverty rate among children around 20%; 3x’s higher than in Europe
0 Welfare state generationally skewed (most benefits flow to elderly through expensive
programs like Medicare and Social Security)
0 Poverty today
0 Good and bad jobs growing in postindustrial economy at expense of blue
collar jobs in middle
0 Service sector characterized by low wages, no benefits, irregular employment
0 Value of federal minimum wage has declined (Table 10.1)
0 See page 331, Responsibility for Poverty: What Do You Think?
Great Society Program
0 Last serious effort to address poverty, Johnson (1964)
0  democratic electoral victory overcame conservative coalition (Republicans and
Southern Democrats) and mobilized protests of civil rights movement
0 Johnson declared a War on Poverty (Great Society, free of hunger and privation, in
State of the Union, 1964)
0 Government assumed new responsibilities
0 Federally funded health insurance (Medicare and Medicaid) for aged and poor; New
educational opportunities for disadvantaged (Head Start, Upward Bound); Job-training
programs (Job Corps); Housing and urban development programs (Model Cities)
0 Goal  enhance opportunities for poor; federal welfare expenditures nearly doubled
(1965-1975)
0 Short-lived reform period; undermined by unrest and war in Vietnam
0 Many conservatives thought War on Poverty failed, harmful
0 Great Society created backlash = polarized electorate along social insurance/
public assistance and race lines
0 Politicians exploited tensions using “welfare” as code word to appeal to some voters’
fears over crime, taxes, morality, and race; recoil reached peak during Reagan
administration (1981-89)
0 War on poverty: successes
0 Reduced poverty rate from 19% (1964) to 12% (1979); number living below poverty
line declined until Reagan
0 Government income-support programs biggest factor in decline  reduced
malnutrition, increased access to medical care, improved housing, opened educational
opportunities
Reagan to Clinton
0 Reagan partially successful in reducing size, scope of welfare state
0 Slowed spending; slashed Great Society programs
0 Left New Deal social insurance programs intact
0 Put welfare state on defensive; conservatives now set terms of debate
over social policy
0 Problem of poverty = increasing poor’s resources  changing the poor’s
behavior; blaming circumstances on inadequacies of economy  perverse
incentives of welfare state
0 Clinton’s social policy turned on large federal deficit and conservative
definition of welfare problem (public assistance undermined character
of the poor)
0 Abandoned campaign promise to invest in domestic programs to reassure
financial markets he was serious about cutting federal deficit
0 Supported welfare “reform” with Personal Responsibility and Work
Opportunity Reconciliation Act (PRWORA) (1996)
0 Replaced AFDC with Temporary Assistance to Needy Families (TANF)
0 States got fixed sums in form of block grants; Two year limits; lifetime limit of 5 years
0 Welfare rolls declined starting in 1993 with resurgent economy
0 Grew again in wake of 2008 Great Recession
Bush to Obama
0 Expanded federal role in public education
0
No Child Left Behind (NCLB) (2002) enacted with aim of closing achievement gap between
economically and racially advantaged and disadvantaged schoolchildren; increasingly controversial due
to lack of funding
0 Bush supported Medicare Part D (Medicare Prescription Drug, Improvement, and
Modernization Act, 2004); provides prescription drug coverage to all Medicare
recipients
0
Supported by pharmaceutical manufacturers (who lobbied for no price controls, price regulation, and
government negotiation with drug manufacturers to secure lower prices)
0 Increased spending on children’s health (started by Clinton, expanded by Obama)
0
0
State Children’s Health Insurance Plan (SCHIP) expanded federal Medicaid spending so states could
provide health insurance to children whose families met income requirements
Obama signed Children’s Health Insurance Program Reauthorization Act (2009)
0 With Medicare Part D, SCHIP, increases in Medicare and Medicaid, health became
fastest growing are of welfare state
0 US at top in expenditures on health (Figure 10.2)
0 Obama supported Affordable Health Care Act (AHCA) (2010)
0
Employers (more than 50 workers) must provide affordable insurance; individuals required to carry
health insurance (low income eligible for Medicaid; subsidies on sliding scale); state-based insurance
marketplaces called exchanges; insurers no longer able to deny applicants coverage based on health
status, impose lifetime limits; improved medicare prescription drug benefit; children can remain on
parent’s policies until 26
0 Hugely controversial; prompted massive lobbying campaign by pharmaceutical
industry and health insurance companies; successfully blocked public insurance
option
Conclusion
0 Conservative = stabilizes corporate capitalist system; alleviates but
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does not correct basic structural inequalities; reinforces market by
making inequalities and 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 the poor, whites and blacks, men and women
Uncertain future; parts under strain (including Medicare, Social
Security)
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 generated by political
economy; provide security against inevitable and probable hazards;
enhance and equalize opportunities; ensure that income and wealth
gaps are reduced…what do you think?