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Economic and Social Welfare Policymaking

Video: The Big Picture 16

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Learning Objectives

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

16.1

16.2

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Learning Objectives

Assess the extent of economic inequality in America and the role of government in lessening it

Trace the change over time in major federal welfare programs

16.3

16.4

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Learning Objectives

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

16.5

16.6

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Learning Objectives

Assess the impact of social welfare policies on democracy and the scope of government in America

16.7

Video: The Basics 16

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Two Major Worries: Unemployment and Inflation

Policies for Controlling the Economy

Why It Is Hard to Control the Economy

16.1Economic Policymaking

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%

16.1Two Major Worries: Unemployment and Inflation

Laissez-faire

Monetary policy and the “fed” Federal Reserve Board Meets in secret; not accountable to Congress Manipulating the amount of money

16.1Policies for Controlling the Economy

Fiscal policy: Keynesian v. supply-side economics Taxing, spending, borrowing Keynesian economic theory Supply-side economics

16.1Policies for Controlling the Economy

16.1Chairman of the Fed, Ben Bernanke

16.1FIGURE 16.1: How the Obama administration’s predictions of the impact of the 2009 stimulus plan went awry

Video: Thinking Like a Political Scientist

16.1

http://media.pearsoncmg.com/ph/hss/SSA_SHARED_MEDIA_1/polisci/presidency/Seg4_EconomicPolicy_v2.html

“Political business cycle” Presidents control economy to win elections

Private sector dominates economy Federal government is ¼ of GDP Impact of government policies gradual

16.1Why It Is Hard to Control the Economy

16.116.1 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

16.116.1 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

Video: In Context 16.1

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Biggest government expense

Only 17% goes to poor

16.2Types of Social Welfare Policies

Entitlement programs Social Security, Medicare Largest and most expensive

16.2Types of Social Welfare Policies

Means-tested programs Food stamps, Medicaid Fear of dependency

16.2Types of Social Welfare Policies

16.216.2 Which of the following is an example of an entitlement program?

a. Food stamps

b. Medicaid

c. Postal service

d. Medicare

16.216.2 Which of the following is an example of an entitlement program?

a. Food stamps

b. Medicaid

c. Postal service

d. Medicare

Explore the Simulation: You Are the Federal Reserve Chair

16.2

http://media.pearsoncmg.com/long/long_longman_media_1/2013_mpsl_sim/simulation.html?simulaURL=18

Explore Economic Policy: Who Broke the Economy?

16.2

http://media.pearsoncmg.com/long/long_edwards_mpslgia_16/pex/pex16.html

Who’s Getting What?

Who’s Poor in America?

How Public Policy Affects Income

16.3Income, Poverty, and Public Policy

16.399%

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%

16.3Who’s Getting What?

16.3FIGURE 16.2: Increase in income inequality and the rise of the top 1%

Poverty line $11,139 in 2010

46.6 million Americans poor in 2010 15.2% of population

Demographics of poverty Feminization of poverty

16.3Who’s Poor in America?

16.3If landmass were divided like wealth

16.3FIGURE 16.3: Poverty rates for persons with selected characteristics, 2010: A comparison of the official and supplemental measures

Taxation Progressive Proportional Regressive

16.3How Public Policy Affects Income

Government Expenditures Transfer payments Social security, unemployment benefits, food stamps, etc.

16.3How Public Policy Affects Income

16.3EBT at the farmers’ market

16.3TABLE 16.1: The major social welfare programs

16.316.3 What percentage of Americans live below the poverty line?

a. 5.3%

b. 10%

c. 15.2%

d. 25.6%

16.316.3 What percentage of Americans live below the poverty line?

a. 5.3%

b. 10%

c. 15.2%

d. 25.6%

Video: In the Real World 16.3

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“Welfare” as We Knew It

Ending Welfare as We Knew It: The Welfare Reform of 1996

16.4Helping the Poor? Social Policy and the Needy

FDR’s New Deal programs Social Security Act of 1935 AFDC

Johnson’s War on Poverty Food stamps

16.4“Welfare” as We Knew It

Republican’s war on dependency “Welfare queens” Deadbeat dads The undeserving poor/African Americans

16.4“Welfare” as We Knew It

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

16.4Ending Welfare as We Knew It: The Welfare Reform of 1996

16.4Climb Wyoming

16.4FIGURE 16.4: How welfare reform drastically reduced the welfare rolls

16.416.4 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

16.416.4 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

Growth of Social Security

Reforming Social Security

16.5Social Security: Living on Borrowed Time

Popular program

Modest benefits Average $1,229/month

Most expensive public policy But fiscally sound Surplus depleting since 2010

What is the solution?

16.5Growth of 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

16.5Reforming Social Security

16.516.5 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

16.516.5 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

The European welfare state

Taxes and benefits

Individual v. government responsibility

16.6Social Welfare Policy Elsewhere

16.616.6 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

16.616.6 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

Democracy and Economic and Social Welfare Policies

Economic and Social Welfare Policies and the Scope of Government

16.7Understanding Economic and Social Welfare Policymaking

Problems of free enterprise addressed via democracy Government regulation demanded Limits to economic freedom

Groups unequal in political resources Policy inertia

16.7Democracy and Economic and Social Welfare Policies

16.7Child labor

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

16.7Economic and Social Welfare Policies and the Scope of Government

16.716.7 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

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

16.7

Discussion Question

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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Video: So What? 16

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Further Review: On MyPoliSciLab

Listen to the Chapter

Study and Review the Flashcards

Study and Review the Practice Tests

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