Chapters 10 & 11Karger and Stoesz

Jamy Garcia-PerselStephanie Prince

Amanda Parker Trautmann

Social Insurance: “cornerstone of U.S. Social Insurance: “cornerstone of U.S. social welfare”social welfare”* Individuals must insure themselves * Individuals must insure themselves

against indigence against indigence * Money is set aside in trust* Money is set aside in trust* Managed by the government* Managed by the government* Workers are entitled to benefits based * Workers are entitled to benefits based

upon previous contributionsupon previous contributions* Workers must contribute before filing * Workers must contribute before filing a claima claim

* Not subject to a means test* Not subject to a means test

* Universal: benefits are received as legal entitlement regardless of personal wealth

* Less stigma compared to public assistance “I earned it, it’s not charity.” * Originally designed to replicate private

insurance. Now it has taken on some of the characteristics of public insurance due to dependency.

* Major Goal: Maintain income by replacing a lost income with a portion of lost earnings.

1920: Federal Employee Retirement 1920: Federal Employee Retirement Program beganProgram began

1931: 17 states have old-age assistance 1931: 17 states have old-age assistance programs However, they are very programs However, they are very restrictive and punitiverestrictive and punitive

1935: All states with the exception of 1935: All states with the exception of Georgia & South Carolina have assistance Georgia & South Carolina have assistance programs for widows and childrenprograms for widows and children

1935: Social Security Act of 1935, 1935: Social Security Act of 1935, framework for modern welfare stateframework for modern welfare state

1948: All states have Worker’s 1948: All states have Worker’s CompensationCompensation

1983 Partial Reserve System1983 Partial Reserve System

Some Abbreviations for YouSome Abbreviations for You That are Sure to be Said as a SW:That are Sure to be Said as a SW: OASDI: Old-age, survivors, and disability

insurance UI: Unemployment Insurance WC: Worker’s Compensation DI: Disability Insurance MEDICARE: Part A: Refers to federal hospital insurance Part B: Refers to supplementary medical

insurance

Statistics:Statistics: * Social insurance programs are

financed four times higher than public welfare.

* It accounted for 22.1% of the 1993 total federal budget.

* 3.4% of the federal budget went to public assistance.

* It is the income for 38-39% of aged and disabled persons.

OASDI * Upon retirement/disability, worker receives

monthly benefit. Also, a widow(er) or surviving children can collect the benefit.

* Must have paid in 40 quarters (10 years).

Unemployment Insurance * First line of defense for people who are fired

or laid off. * Temp., partial wage replacement meant to

stabilize economy during recession. * Regular, state-funded with max. of 26 weeks

of benefits OR fed & state-funded extended prog. With an add’l 13 weeks of coverage.

Workers CompensationWorkers Compensation * Cash, medical assistance, rehabilitation, and

disability/death benefits to victims of industrial accidents.

Privatization of Social SecurityPrivatization of Social Security * Purpose is to increase worker control of retirement. * Claims social security is depressing private savings,

and this creates less capital for investment. * Currently we have guaranteed pension vs. risky stock

market. * This would create a stiff tax for young workers. * Would undermine security of workers who take time off

for childbearing, care of elderly parents, illness. *Lowest wage workers are supported by contribution of

higher paid workers -- EVERYONE must contribute!!!

OverviewOverview * Former Aide to Dependent Children * Temporary Assistance to Needy Families * Supplemental Security Income * General Assistance

Public assistance is one of the most misunderstood parts of the U.S. welfare state.

Public assistance programs are based entirely on need and therefore are means tested.

The rationale for public assistance programs that offer cash, medical, and other assistance are “safety nets”-- the plan is to ensure that people who receive these basic services will not fall below the poverty level.

Federal guidelines help determine the level of aid for the poor. Individual states have the freedom to determine their own safety nets.

Aid to Families with Dependent Aid to Families with Dependent ChildrenChildren

* AFDC was the most controversial program in the U.S. welfare system.

* Purpose: to maintain and strengthen family life by providing financial assistance to dependent children in need and their families.

* Because AFDC has been used as an ideological battle between liberals and conservatives, recipients have become victimized by: their own poverty ideological motives that assault their

character.

Evolution of AFDC ProgramEvolution of AFDC Program * Original name was Aid to Dependent Children

(ADC) Part of the Social Security Act of 1935 It was designed to support children by giving

assistance to their mothers. Some critics of ADC felt that it promoted desertion

by fathers because assistance was allowed only to families without able-bodied fathers.

1961: Families in which a father was incapacitated or unemployed were allowed to receive assistance. Program was called ADC-UP(Unemployed Parent). Only 25 states adopted it until it became mandatory in 1988.

1962: Name was changed to AFDC to emphasize the family unit.

A notorious chapter in AFDC history was that of the man-in-house-rule: Any women who had an able-bodied man in her house would be terminated from AFDC regardless if he was the father of the children or not. There are stories of midnight raids…

1988: Until 1996 and the enactment of TANF, the Family Support Act (FSA) of 1988 was one of the most important pieces of welfare legislation since the New Deal.

1992: In his presidential campaign, Wiliam Jefferson “Bill” Clinton promised to end welfare as we knew it by instituting a two year cap on AFDC benefits.

1994: The Ultraconservative 104th Congress obviated the possibility of passing any welfare reform bill that included liberal components such as subsidized housing.

1996: Clinton signed Personal Responsibility and Work Opportunity Reconciliation Act of 1996

The PRWORA changed the social service system by replacing AFDC, JOBS, and Emergency Assistance Program with Temporary Aid for Needy Families (TANF) program.

Under PRWORA, there was no federal entitlement to assistance. This meant that the states had the responsibility to provide assistance to persons who were eligible.

Why was this radical bill passed? It was the conservatism of the 104th congress that clearly spurred the bill, the Clinton administration had already paved the way.

Has PRWORA worked?Has PRWORA worked?

Both democrats and republicans feel that it has been successful, due to the drop in public assistance caseloads since its implementation. The real measure of success will be to see it performs during a time of recession.