Transcript edwards_ch16_lecture

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Economic and Social
Welfare Policymaking
16
Kevork Djansezian/Getty Images News/Getty Images
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Learning Objectives
16.1
16.2
16
Identify the main policy tools that
American government can employ to
address economic problems, and
contrast Keynesian and supply-side
economics.
Compare and contrast entitlement
and means-tested social welfare
programs.
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Learning Objectives
16
16.3
Assess the extent of economic
inequality in America and the role of
government in lessening it.
16.4
Trace the change over time in major
federal welfare programs.
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Learning Objectives
16.5
16.6
16
Outline how America's Social
Security program works and the
challenge of keeping it financially
solvent in the coming years.
Distinguish American social welfare
policy from that of other established
democracies.
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Learning Objectives
16.7
16
Assess the impact of social welfare
policies on democracy and the scope
of government in America.
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Economic Policymaking
 Two Major Worries: Unemployment and
Inflation
 Policies for Controlling the Economy
 Why It Is Hard to Control the Economy
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16.1
Two Major Worries:
Unemployment and Inflation
 Unemployment rate
 10% in Great Recession
 Underemployment rate
 Tracked by Bureau of Labor Statistics (BLS)
 Inflation
 Rise in price of goods and services
 Consumer price index (CPI)
 Averages 4%
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16.1
Policies for Controlling the
Economy
 Laissez-faire
 Monetary policy and the "fed"
 Federal Reserve Board
 Meets in secret; not accountable to Congress
 Manipulating the amount of money
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16.1
Policies for Controlling the
Economy
 Fiscal policy: Keynesian v. supply-side
economics
 Taxing, spending, borrowing
 Keynesian economic theory
 Supply-side economics
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16.1
16.1
Chairman of the Fed, Janet Yellen
Bloomberg/Getty Images
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FIGURE 16.1 How the Obama
administration's predictions of the impact of
the 2009 stimulus plan went awry
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16.1
Why It Is Hard to Control the
Economy
 "Political business cycle"
 Presidents control economy to win elections
 Private sector dominates economy
 Federal government is ¼ of GDP
 Impact of government policies gradual
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16.1
16.1 Laissez-faire economic theory
holds that government intervention in
the economy
a. Is needed during recessions and
depressions
b. Is key to preventing inflation
c. Is detrimental to economic growth and
prosperity
d. Is necessary only when interest rates
are too high
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16.1
16.1 Laissez-faire economic theory
holds that government intervention in
the economy
a. Is needed during recessions and
depressions
b. Is key to preventing inflation
c. Is detrimental to economic growth
and prosperity
d. Is necessary only when interest rates
are too high
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16.1
Types of Social Welfare
Policies
 Biggest government expense
 Only 17% goes to poor
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16.2
Types of Social Welfare
Policies
 Entitlement programs
 Social Security, Medicare
 Largest and most expensive
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16.2
Types of Social Welfare
Policies
 Means-tested programs
 Food stamps, Medicaid
 Fear of dependency
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16.2
16.2 Which of the following is an
example of an entitlement program?
a. Food stamps
b. Medicaid
c. Postal service
d. Medicare
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16.2
16.2 Which of the following is an
example of an entitlement program?
a. Food stamps
b. Medicaid
c. Postal service
d. Medicare
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16.2
Income, Poverty, and Public
Policy
 Who's Getting What?
 Who's Poor in America?
 How Public Policy Affects Income
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16.3
16.3
99%
Chip Somodevilla/Getty Images News/Getty Images
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Who's Getting What?
 Income distribution
 Sense of justice and equality in a democracy
 Relative deprivation increasing
 Wealth versus income




Income is amount collected in given time
Wealth is value of assets
1/3 of wealth held by 1%
1/3 held by 90%
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16.3
FIGURE 16.2 Increase in income inequality
and the rise of the top 1%
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16.3
Who's Poor in America?
 Poverty line
 $11,139 in 2010
 46.6 million Americans poor in 2010
 15.2% of population
 Demographics of poverty
 Feminization of poverty
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16.3
If landmass were divided like wealth
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16.3
FIGURE 16.3 Poverty rates for persons with
selected characteristics: A comparison of the
official and supplemental measures
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16.3
How Public Policy Affects
Income
 Taxation
 Progressive
 Proportional
 Regressive
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16.3
How Public Policy Affects
Income
16.3
 Government Expenditures
 Transfer payments
 Social security, unemployment benefits, food stamps, etc.
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EBT at the farmers' market
Rich Pedroncelli/AP Images
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16.3
TABLE 16.1 The major social welfare programs
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16.3
16.3 What percentage of Americans
live below the poverty line?
a. 5.3%
b. 10%
c. 15.2%
d. 25.6%
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16.3
16.3 What percentage of Americans
live below the poverty line?
a. 5.3%
b. 10%
c. 15.2%
d. 25.6%
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16.3
Helping the Poor? Social
Policy and the Needy
 "Welfare" as We Knew It
 Ending Welfare as We Knew It: The
Welfare Reform of 1996
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16.4
"Welfare" as We Knew It
 FDR's New Deal programs
 Social Security Act of 1935
 AFDC
 Johnson's War on Poverty
 Food stamps
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16.4
"Welfare" as We Knew It
 Republican's war on dependency
 "Welfare queens"
 Deadbeat dads
 The undeserving poor/African Americans
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16.4
Ending Welfare as We Knew It:
The Welfare Reform of 1996
16.4
 Personal Responsibility and Work
Opportunity Reconciliation Act (PRWORA)




States would run their own programs
Two year limit for benefits
Lifetime maximum of 5 years
From AFDC to TANF
 Reforms were effective
 Benefit dollar amounts declined
 Number of recipients declined
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16.4
Climb Wyoming
Carmel Zucker/The New York Times/Redux
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FIGURE 16.4: How welfare reform
drastically reduced the welfare rolls
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16.4
16.4 Which of the following was a
goal of welfare reform?
a. Reduce the number of people living in
poverty
b. Reduce the number of children who lack
medical insurance
c. Reduce the number of people receiving
welfare benefits
d. Reduce the need for job training to get
people off welfare
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16.4
16.4 Which of the following was a
goal of welfare reform?
a. Reduce the number of people living in
poverty
b. Reduce the number of children who lack
medical insurance
c. Reduce the number of people
receiving welfare benefits
d. Reduce the need for job training to get
people off welfare
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16.4
Social Security: Living on
Borrowed Time
 The Growth of Social Security
 Reforming Social Security
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16.5
Growth of Social Security
 Popular program
 Modest benefits
 Average $1,229/month
 Most expensive public policy
 But fiscally sound
 Surplus depleting since 2010
 What is the solution?
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16.5
Reforming Social Security
 Politically difficult
 Older Americans have high voting rate
 Reform proposals
 Bush: Put 1/3 into private investments
 Obama




Increase age to receive benefits
Lower inflation raises
Reduce benefits for wealthy recipients
Raise contribution amounts
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16.5
16.5 Which of the following was a
Social Security reform proposed by
President Bush?
a. Lower age to receive benefits
b. Increase contributions
c. Raise age to receive benefits
d. Divert funds to stock market
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16.5
16.5 Which of the following was a
Social Security reform proposed by
President Bush?
a. Lower age to receive benefits
b. Increase contributions
c. Raise age to receive benefits
d. Divert funds to stock market
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16.5
Social Welfare Policy
Elsewhere
 The European welfare state
 Taxes and benefits
 Individual v. government responsibility
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16.6
16.6 What is the main difference in
the American and European attitudes
toward poverty?
a. Americans believe poverty is your own
fault
b. Europeans believe poverty is a result of
circumstances beyond your control
c. Both A & B
d. Neither A nor B
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16.6
16.6 What is the main difference in
the American and European attitudes
toward poverty?
a. Americans believe poverty is your own
fault
b. Europeans believe poverty is a result of
circumstances beyond your control
c. Both A & B
d. Neither A nor B
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16.6
Understanding Economic and
Social Welfare Policymaking
16.7
 Democracy and Economic and Social
Welfare Policies
 Economic and Social Welfare Policies and
the Scope of Government
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Democracy and Economic
and Social Welfare Policies
 Problems of free enterprise addressed
via democracy
 Government regulation demanded
 Limits to economic freedom
 Groups unequal in political resources
 Policy inertia
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16.7
16.7
Child labor
Lewis W. Hine/Archive Photos/Getty Images
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Economic and Social Welfare
Policies and the Scope of
Government
 Liberals and conservatives disagree
 Liberals advocate more govt. intervention
 Conservatives want less
 Welfare state too big or too small?
 Depends which side you are on
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16.7
16.7 The viewpoint that the welfare
state is too large and serves an
undeserving clientele is likely to be
espoused by
a. A liberal
b. A conservative
c. Both
d. Neither
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16.7
16.7 The viewpoint that the welfare
state is too large and serves an
undeserving clientele is likely to be
espoused by
a. A liberal
b. A conservative
c. Both
d. Neither
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16.7
Discussion Questions
What tools does the government possess
to intervene in the economy? Who wields
these tools and how effective are they in
improving economic growth? Why do
conservatives and liberals disagree about
social welfare policy?
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16