Alexeyev V.S.

Oles Honchar Dnipropetrovsk National University (Ukraine)

SOCIAL WELFARE POLICY-MAKING in the USA

The United States is a diverse nation whose citizens and groups achieve different levels of material success. This fact raises important political and policy questions. Social welfare policies attempt to provide assistance and support to specific groups in society. Some benefits are provided regardless of financial needs (entitlements) while others are given only to those in particular need. The distribution of these benefits are issues that must be resolved by the political system.

Americans are a rich people, especially given their relatively low cost of living and low taxes in comparison with other nations. In this people of plenty, there is still plenty of poverty. Income distribution describes the share of national income earned by various groups. The range of American incomes is vast. During the 1980s, the incomes of the wealthiest Americans grew while the incomes of the poorest actually fell. The sense of relative deprivation, where one group believes it is doing less well in relation to another reference group, is growing in the United States. Income and wealth are not the same thing. Income is the amount of funds collected between any two time points. Wealthis the amount already owned. Wealth has been much less evenly distributed than income. Relative to higher-income groups the poor are losing ground. The problem is that many of the poor are losing ground in absolute terms as well.

To count the poor, the Bureau of the Census uses the poverty line, which takes into account what a family would need to spend for an “austere” standard of living. The percentage of people below the poverty line has risen since 1978. Many people live close enough to the poverty line that a crisis could push them over. Poverty is more common among some groups (African Americans, Hispanics, young people, and inner city residents) than among others.

Views on who are poor and why they are poor affect public policy choices. Conservatives tend to believe that individual characteristics, attitudes, and values are primary factors affecting wealth or poverty. Liberals argue that some people face hostile environments that are barriers to their success. Studies have not supported the conservative argument. Most welfare beneficiaries are not long-term recipients. Researchers have never found a culture of poverty distinguishing the poor from the nonpoor. It is usually some personal crisis that accounts for movement below the poverty line. The urban underclass is the poorest of the poor in America whose economic opportunities are severely limited in almost every way. A central focus of welfare policy in the 1990s was how to prevent riots among the urban underclass.

Although many factors that affect income are out of its control, the government has a major impact on its citizen’s wealth and income through taxes and expenditures. Taxes can affect income in one of three ways. A progressive tax takes a bigger share of the rich family’s income than of the poor family’s income. A proportional tax takes the same shares from everyone. Finally, a regressive tax takes a higher percentage from the lower income levels than from the well-to-do. Generally, federal taxes are progressive while state and local taxes (especially sales tax) have a regressive effect. The net effect is proportional. At the national level the wealthy are paying a good deal of the income taxes to support many government policies.

Government can also affect income by making transfer payments, which transfers money from the general treasury to those in specific need. They include cash transfers (e.g., a social security check) and in-kind transfers (e.g., food stamps). Many are better off relative to poverty status due to transfer payments. However, there is little evidence that transfer payments have significantly redistributed income or created greater income equality. Morgan Reyonold and Eugene Smolensky estimated the effect of government expenditures in various categories on individual incomes. They discovered that income inequality has hardly been touched by public policy over a thirty year period. There is no widespread support for income redistribution. Americans tend to favor equal opportunity over equal outcomes.

Social welfare programs have produced substantial improvements in living conditions of many Americans. Entitlement programs (Social Security, Medicare) are the largest and most expensive social welfare programs in America. They have had a positive effect on the health and income of older Americans. Means-tested programs aimed at the poor (Medicaid, Food Stamps) are funded at much lower levels than entitlement programs. However, these programs have raised many of the poor above the official poverty line.

Most industrial nations are more generous with social welfare benefits than the United States. Americans tend to see poverty and social welfare needs as individual while Europeans tend to support greater governmental responsibility. Europeans also tend to have a more positive attitude toward government. Nations also differ in how universal or selective they make their social welfare payments. Taxes commensurate with the benefits of social policy are far more commonplace in Western Europe than in the United States.

Americans seek to retain a commitment to both competition and compassion. Sorting out the proper balance of these values is at the heart of policy disagreements about social welfare programs. There are demands for both action and restraint for social welfare programs. Decision-makers are influenced by their constituencies, electoral coalitions, and political party. In the social welfare arena, competing groups are often unequal in terms of political resources. The elderly have great resources while the poor have few. Although government benefits are difficult to obtain, they are also difficult to withdraw once established. Policies develop a life of their own. Pressures come from supporters to keep or to expand programs even if they become too big and expensive. Despite conservative presidents, the government now spends a large share of the gross national product on social welfare policies than it did during the previous administrations.