Today, most people agree that the government should assist the poor and disadvantaged, but there are vigorous debates about how best to achieve these ends. Republicans generally support market-based approaches, while Democrats tend to favor direct government involvement in programs to assist the poor, the disadvantaged, and the elderly.

• History and Background of Social Policy
  • Before the Civil War, the government was not involved in the provision of social services: it was left up to families, charities, and churches to take care of the poor.
  • Social policy began slowly, with financial support for Civil War veterans, but the government did not truly begin embracing social change in two eras: Franklin Roosevelt’s New Deal, and Lyndon Johnson’s Great Society.
    • Among other things, the New Deal programs included provisions for farmer assistance, the creation of jobs under the Civil Works Administration, the development of Social Security, and the guarantee of the right to organize a union.
    • The Great Society programs supported the civil rights movement, but also included the War on Poverty and creation of programs focused on health, education, and housing.
  • Social policy provisions were pared back under the Reagan and George W. Bush administrations.
• Poverty and Income Inequality
  • The primary motivators for social policy are the persistence of poverty and the growing income and wealth inequality in the United States.
    • Republicans view statistics on policy and argue that the best way to remedy these problems is supply-side economics: offer tax cuts that will allow wealthy people to invest in industries and create jobs for the underclass.
    • Democrats argue that the way to remedy poverty is to make the wealthy pay a larger share of taxes that fund programs that directly assist the poor.
    • In general, Democratic presidents have been able to reduce the poverty rate much more than Republican presidents have. However, Democratic presidents were more likely than Republican presidents to have a Congress controlled by their party, which means that Democratic presidents may have had more of an opportunity to fully implement their agenda.
• Key Players in Social Policy Making
  • Congress and the President
    • Congress and the president both play central roles in shaping social policy. Even if they are from the same party, they may not share the same agenda, and they must hammer out their differences to find some common ground.
  • The Bureaucracy
    • While Congress and the president set social policy, the bureaucrats do have discretion in how social policies are implemented.
    • Bureaucratic agencies have developed political autonomy and strong reputations that allow them to analyze and solve problems, create new programs, and administer programs efficiently.
  • The States
    • Some social policies are strongly influence by our federalist system. While Social Security is administered at the federal level, policies like Medicaid, education evaluation, and welfare are administered at the state level.
  • Interest Groups
    • As a rule, interest groups advocating for social policy are not as influential as interest groups advocating for economic policy.
      • The AARP is an exception, as it is an extremely powerful organization with an active support base.
    • While some interest groups work on behalf of the poor and homeless, decision makers are not generally very responsive to their concerns because these groups are not politically powerful.
• The Policy-Making Process
  • The first stage of making policy is to define a problem as an issue that requires attention from the federal government.
    • Though there are thousands of issues, only a small number are addressed by Congress.
    • Sometimes a triggering event (such as a natural disaster) can bring an issue to the forefront, or it can redefine the way an issue is perceived.
    • Once a problem is recognized and defined, it still needs to make its way to the policy agenda, which are a set of policies that political leaders view as their top priorities.
      • When the conditions are right, with the appropriate national political mood and participation and cooperation from key interest groups and government actors, an issue is likely to reach the agenda.
    • Once the issue is on the agenda, alternatives are proposed, debated, and the final draft if formulated in Congress or the executive branch. For a policy to be successfully implemented:
      • The problem must be solvable, and the policy must be clear in its objectives.
      • The policy must be adequately funded and competently administered by expert bureaucrats.
      • The public and relevant interest groups must offer external support.
    • Program evaluation is critical to successful implementation, though it is difficult. Program performance is difficult to measure in the public sector, as there are no simple measures (like profit in the business world) to indicate performance.
• Social Security is the most popular social program in the United States. It provides cash benefits to retirees based on the payroll taxes that they paid over the course of their careers.
  • Although the pay-as-you-go aspect of it has triggered sustainability issues, its popularity has made it difficult for politicians to promote reform.
    • Social Security’s popularity can be attributed to its universal nature—nearly every working American participates in, and will benefit from, the program. In addition, it is more efficient than privately managed pensions, and it has achieved its goal of lifting most of the elderly out of poverty.
    • The system is pay-as-you-go, which means that today’s workers are providing the benefits for today’s retirees.
      • Social Security is funded by a payroll tax of 6.2 percent of income up to $102,000, with an equal 6.2 percent that is paid by employers.
      • Though the tax itself is regressive, the benefits are progressive: poorer people receive benefits based on a larger share of their payroll taxes than the wealthy.
    • Social Security’s pay-as-you-go system is set to encounter significant problems in the coming years.
      • The Baby Boom generation is transitioning from supporting the program as wage-earners, to benefiting from the program as recipients. The simultaneous decrease in payers and increase in beneficiaries will strain the system.
      • Due to the intergenerational transfer of wealth, current retirees will receive far more in benefits than they paid in Social Security taxes, while many current workers will not get back as much as they paid in.
    • Democrats and Republicans have both misused the issue of Social Security reform for political purposes.
      • Republicans are generally more alarmist in their reform attempts, warning of rapidly approaching insolvency and promoting dramatic reforms.
      • Democrats argue that changes to the system do not need to be immediate, and that it will only take small changes in benefits and taxes to resolve the problems.
  • There are many proposals for Social Security reform, but there are three that have generated the most attention.
    • The most controversial concerns the privatization of Social Security, which moves Social Security accounts out of the public sector into the private sector.
      • Republicans, who generally favor this approach, argue that long term investments in the stock market achieve a better rate of return than Social Security.
      • Democrats, who generally oppose this approach, argue that moving the system over would incur massive transitional costs. In addition, they argue that stock market investments are too risky for people who depend on their Social Security checks.
    • Other reforms include gradually increasing the retirement age, lowering benefits for nonworking spouses, and increasing the taxable income ceiling.
• The problems in the provision of health care are strikingly similar to the problems facing Social Security. We have an aging population, the costs of health care are rising faster than inflation, and nearly 50 million Americans do not have health insurance.
  • Our current system is a mixture of government spending, private insurance, charity, and out-of-pocket payments.
    • Medicare is the federal health care program of retired people, and Medicaid is the program that covers health care for the poor. Both programs were part of the Great Society reforms in the 1960s.
    • Medicare has three parts:
      • Part A automatically applied to retirees that qualify for Social Security, and covers hospital insurance and inpatient care.
      • Part B is supplemental insurance that retirees can purchase, which covers medical care and outpatient services.
      • Part D is also supplemental insurance that can be purchased, and is a subscription drug benefit that subsidized the costs of medication.
    • Medicaid serves the poor who would otherwise have no insurance. It is an entitlement, and is administered through the states through federal funding.
      • Each state is able to determine how the program will be administered, which can lead to dramatic variation in the level of care across states.
    • The problems facing Medicare and Medicaid are severe. In fact, the projected unfunded liabilities from Medicare and Medicaid are nearly six times as large as for Social Security.
  • There are three main possibilities for health care reform:
    • National single-payer plans are prominent in Western Europe, but are dismissed in the United States as “socialized medicine” and are unlikely to be implemented.
    • Regional health alliances, which would merge regional buying networks with nearly comprehensive coverage, would be a cost-effective way to cover nearly 95 percent of the public. However, the approach is viewed as overly bureaucratic, and those already covered by health insurance worried that the quality of their care would erode.
    • Market-based solutions rely on free-market competition, and favors a combination of employer mandates, tax credits and individual savings accounts. They are most likely to be adopted, but would require consumers to develop the basic knowledge necessary to make the appropriate decisions for their health care.
  • A few incremental reforms have been passed with positive effect, including guaranteeing that people could not be denied health care coverage when they switch jobs, the computerization of patient records, and the expansion of Medicaid to provide health care for children.
• When people think of social programs, the program that most people think of is welfare. The current federal policies have expanded welfare from support for single mothers to a broader policy that is directed to single-headed households more generally.
  • Income support includes provisions for food stamps, unemployment compensation, the Earned Income Tax Credit, and welfare.
    • Food stamps are government-issued coupons that may be used as cash to buy groceries.
    • Unemployment compensation is a reform passed through the New Deal to provide temporary and partial wage replacement to people who have been laid off from work.
    • The Earned Income Tax Credit was established in 1975, and was designed to help the poor transition from welfare to work. It offers tax credits to people who do not earn enough to pay taxes and are relatively poor.
    • Welfare is cash assistance for people who are not working and do not qualify for unemployment.
      • It was initially offered in 1935 under the Aid to Families with Dependent Children (AFDC)program.
      • Public support for welfare waned, and in 1996, the program was replaced by the Temporary Assistance for Needy Families (TANF) program, which shifted implementation away from the federal government to the states and introduced several restrictions for receiving aid, ultimately leading to a dramatic reduction of welfare recipients.
• Education policy is largely implemented by state and local governments, but the federal government has played an increasingly active role in recent decades.
  • The Land Grant College Act of 1862 gave land to eligible states to establish colleges that would promote education in practical professions such as agriculture and mechanical arts.
  • The GI Bill of Rights in 1944 provided access to higher education for veterans returning from World War II.
  • The Department of Education was established in 1980, which gave the national government involvement in monitoring policies on federal financial aid, collecting data on America’s schools, and prohibiting discrimination and ensuring equal access to education.
  • No Child Left Behind Act of 2001 requires yearly statewide standardized testing and holds schools to meeting annual academic benchmarks. Should these benchmarks not be reached, the national government will withhold some funding from these “failing schools.”

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