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Copyright © 2016, 2014, 2011 by Pearson Education, Inc. All Rights Reserved Economic and Social Welfare Policymaking 16 Kevork Djansezian/Getty Images News/Getty Images Copyright © 2016, 2014, 2011 by Pearson Education, Inc. All Rights Reserved 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. Copyright © 2016, 2014, 2011 by Pearson Education, Inc. All Rights Reserved 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. Copyright © 2016, 2014, 2011 by Pearson Education, Inc. All Rights Reserved 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. Copyright © 2016, 2014, 2011 by Pearson Education, Inc. All Rights Reserved Learning Objectives 16.7 16 Assess the impact of social welfare policies on democracy and the scope of government in America. Copyright © 2016, 2014, 2011 by Pearson Education, Inc. All Rights Reserved Economic Policymaking Two Major Worries: Unemployment and Inflation Policies for Controlling the Economy Why It Is Hard to Control the Economy Copyright © 2016, 2014, 2011 by Pearson Education, Inc. All Rights Reserved 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% Copyright © 2016, 2014, 2011 by Pearson Education, Inc. All Rights Reserved 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 Copyright © 2016, 2014, 2011 by Pearson Education, Inc. All Rights Reserved 16.1 Policies for Controlling the Economy Fiscal policy: Keynesian v. supply-side economics Taxing, spending, borrowing Keynesian economic theory Supply-side economics Copyright © 2016, 2014, 2011 by Pearson Education, Inc. All Rights Reserved 16.1 16.1 Chairman of the Fed, Janet Yellen Bloomberg/Getty Images Copyright © 2016, 2014, 2011 by Pearson Education, Inc. All Rights Reserved FIGURE 16.1 How the Obama administration's predictions of the impact of the 2009 stimulus plan went awry Copyright © 2016, 2014, 2011 by Pearson Education, Inc. All Rights Reserved 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 Copyright © 2016, 2014, 2011 by Pearson Education, Inc. All Rights Reserved 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 Copyright © 2016, 2014, 2011 by Pearson Education, Inc. All Rights Reserved 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 Copyright © 2016, 2014, 2011 by Pearson Education, Inc. All Rights Reserved 16.1 Types of Social Welfare Policies Biggest government expense Only 17% goes to poor Copyright © 2016, 2014, 2011 by Pearson Education, Inc. All Rights Reserved 16.2 Types of Social Welfare Policies Entitlement programs Social Security, Medicare Largest and most expensive Copyright © 2016, 2014, 2011 by Pearson Education, Inc. All Rights Reserved 16.2 Types of Social Welfare Policies Means-tested programs Food stamps, Medicaid Fear of dependency Copyright © 2016, 2014, 2011 by Pearson Education, Inc. All Rights Reserved 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 Copyright © 2016, 2014, 2011 by Pearson Education, Inc. All Rights Reserved 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 Copyright © 2016, 2014, 2011 by Pearson Education, Inc. All Rights Reserved 16.2 Income, Poverty, and Public Policy Who's Getting What? Who's Poor in America? How Public Policy Affects Income Copyright © 2016, 2014, 2011 by Pearson Education, Inc. All Rights Reserved 16.3 16.3 99% Chip Somodevilla/Getty Images News/Getty Images Copyright © 2016, 2014, 2011 by Pearson Education, Inc. All Rights Reserved 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% Copyright © 2016, 2014, 2011 by Pearson Education, Inc. All Rights Reserved 16.3 FIGURE 16.2 Increase in income inequality and the rise of the top 1% Copyright © 2016, 2014, 2011 by Pearson Education, Inc. All Rights Reserved 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 Copyright © 2016, 2014, 2011 by Pearson Education, Inc. All Rights Reserved 16.3 If landmass were divided like wealth Copyright © 2016, 2014, 2011 by Pearson Education, Inc. All Rights Reserved 16.3 FIGURE 16.3 Poverty rates for persons with selected characteristics: A comparison of the official and supplemental measures Copyright © 2016, 2014, 2011 by Pearson Education, Inc. All Rights Reserved 16.3 How Public Policy Affects Income Taxation Progressive Proportional Regressive Copyright © 2016, 2014, 2011 by Pearson Education, Inc. All Rights Reserved 16.3 How Public Policy Affects Income 16.3 Government Expenditures Transfer payments Social security, unemployment benefits, food stamps, etc. Copyright © 2016, 2014, 2011 by Pearson Education, Inc. All Rights Reserved EBT at the farmers' market Rich Pedroncelli/AP Images Copyright © 2016, 2014, 2011 by Pearson Education, Inc. All Rights Reserved 16.3 TABLE 16.1 The major social welfare programs Copyright © 2016, 2014, 2011 by Pearson Education, Inc. All Rights Reserved 16.3 16.3 What percentage of Americans live below the poverty line? a. 5.3% b. 10% c. 15.2% d. 25.6% Copyright © 2016, 2014, 2011 by Pearson Education, Inc. All Rights Reserved 16.3 16.3 What percentage of Americans live below the poverty line? a. 5.3% b. 10% c. 15.2% d. 25.6% Copyright © 2016, 2014, 2011 by Pearson Education, Inc. All Rights Reserved 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 Copyright © 2016, 2014, 2011 by Pearson Education, Inc. All Rights Reserved 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 Copyright © 2016, 2014, 2011 by Pearson Education, Inc. All Rights Reserved 16.4 "Welfare" as We Knew It Republican's war on dependency "Welfare queens" Deadbeat dads The undeserving poor/African Americans Copyright © 2016, 2014, 2011 by Pearson Education, Inc. All Rights Reserved 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 Copyright © 2016, 2014, 2011 by Pearson Education, Inc. All Rights Reserved 16.4 Climb Wyoming Carmel Zucker/The New York Times/Redux Copyright © 2016, 2014, 2011 by Pearson Education, Inc. All Rights Reserved FIGURE 16.4: How welfare reform drastically reduced the welfare rolls Copyright © 2016, 2014, 2011 by Pearson Education, Inc. All Rights Reserved 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 Copyright © 2016, 2014, 2011 by Pearson Education, Inc. All Rights Reserved 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 Copyright © 2016, 2014, 2011 by Pearson Education, Inc. All Rights Reserved 16.4 Social Security: Living on Borrowed Time The Growth of Social Security Reforming Social Security Copyright © 2016, 2014, 2011 by Pearson Education, Inc. All Rights Reserved 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? Copyright © 2016, 2014, 2011 by Pearson Education, Inc. All Rights Reserved 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 Copyright © 2016, 2014, 2011 by Pearson Education, Inc. All Rights Reserved 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 Copyright © 2016, 2014, 2011 by Pearson Education, Inc. All Rights Reserved 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 Copyright © 2016, 2014, 2011 by Pearson Education, Inc. All Rights Reserved 16.5 Social Welfare Policy Elsewhere The European welfare state Taxes and benefits Individual v. government responsibility Copyright © 2016, 2014, 2011 by Pearson Education, Inc. All Rights Reserved 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 Copyright © 2016, 2014, 2011 by Pearson Education, Inc. All Rights Reserved 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 Copyright © 2016, 2014, 2011 by Pearson Education, Inc. All Rights Reserved 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 Copyright © 2016, 2014, 2011 by Pearson Education, Inc. All Rights Reserved 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 Copyright © 2016, 2014, 2011 by Pearson Education, Inc. All Rights Reserved 16.7 16.7 Child labor Lewis W. Hine/Archive Photos/Getty Images Copyright © 2016, 2014, 2011 by Pearson Education, Inc. All Rights Reserved 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 Copyright © 2016, 2014, 2011 by Pearson Education, Inc. All Rights Reserved 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 Copyright © 2016, 2014, 2011 by Pearson Education, Inc. All Rights Reserved 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 Copyright © 2016, 2014, 2011 by Pearson Education, Inc. All Rights Reserved 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? Copyright © 2016, 2014, 2011 by Pearson Education, Inc. All Rights Reserved 16
