Case Studies
Social Security
 The Great Depression caused great poverty. No group suffered more than the elderly. Savings accounts were wiped out, pensions were rare and family resources were gone. In order to help protect the elderly, President Franklin D. Roosevelt developed a program, called Social Security which would be a national insurance policy for future generations of senior citizens, payable upon retirement. It was an insurance plan and not a tax and paid benefits to the needy. Even though the original Social Security Plan paid modest benefits, $10 a month to start, it still met with powerful opposition.
According to Wilbur Cohen, Secretary of Health Education and Welfare in the 60’s, and other social economists who helped to shape Social Security, "Roosevelt clear saw 50 years in the future that there might be a President sometime who’d want to cut-back on the safety net, and one of the ways to prevent that in Social Security was to make the individual and the employer pay for it."
| Comment & Analysis by Richard Gill The reason was Social Security is a popular program is that it provides for the needs of the elderly and has reduced poverty among the elderly. It is a transfer program, where the younger generation is transferring income to the older generation in return for a promise that they will get an income when they become elderly. It had grown and is a much bigger system than foreseen. |
Job Corps
 In the 1960’s, President Lyndon Johnson declared a war on poverty. Many felt that the root of poverty was unemployment and that job training would mean employment and income and an end to poverty. The Jobs Corps was created to train people so they could get a job and support themselves. More than 600,000 people completed Job Corps training in its first 20 years and statistics showed about 90 percent found jobs.
But when Ronald Reagan became President he believed the government should get out of the way so people could help themselves. He believed that the Job Corps flunked the cost benefit test ..too much cost…too little benefit. Other politicians believed that the Job Corps works and continues to be a good investment. They prevented Reagan from abolishing the program.
| Comment & Analysis by Richard Gill Reducing hardcore poverty is difficult. The training is expensive. Many drop out. And in a recessionary economy, it is difficult to find employment. So the question raised is how much of the tax dollars spent on the Job Corps or such programs actually produce results. |
Welfare Reform Act
 The Welfare system of the 60’s was a confusing maze of programs and was an expensive program for the US tax payer. Throughout the 70’s and 80’s politicians were calling for reform. In 1996 President Bill Clinton signed the Welfare Reform Act. It emphasized a move from welfare to work with child care assistance provided for those mothers who went into the workforce. In the booming 90’s, welfare caseload declined by 60% nationally. But the success of the Clinton reform didn't seem to work for families that had higher employment barriers. Nor was its success universal, but it varied from state to state.
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