PO 241 Midterm 2
Social Welfare (Goal: Eliminate Poverty)
3 kinds of income support policies
– Social insurance programs (least controversial),
work/employment programs, public assistance programs (most controversial because lazy people collect
welfare for doing nothing)
– Social Security Administration (Most widely used measure) Tells how person’s
standard of life is. Poverty standard for family of 4 (one adult, 3 kids) = 19,223. Abs. pov. Measure not sued
because it’s too difficult. Specifies min level of well being n nutrition, shelter, clothing, health,
development, what income is sufficient to maintaining level. Min level fluctuates with inflation and general
standard of living.
Critics of Absolute Poverty
– SSA definition is too low. Ignores variation in cost of living. Dept of
Agriculture: poverty threshold $4,000 higher.
– Measures income. Poor = Earns less than half of US median income. No specific level
of material well being. Compares poor to other members in society.
Social Security ≠ Welfare
because you pay into SS.
Who are the poor? (5)
– Aged, Women, Less Educated, Rural, Working poor (Min. Wage)
2004 Federal Min Wage
- $5.15 per hr, $10,712 per year
2004 Mass. Min Wage
- $6.75 per hr, $14,040 per year
– Social Insurance
Social Security Act 1935
- $ to old age, survivors, disability and health insurance. (OASDHI). Single
largest item of federal spending.
– Those who pay into it. 90% of working population.
Survivor’s Benefits 1939
– Must be less than 18 to collect.
– Health care for 65+
Reform Proposals to Prevent SSA bankruptcy (5)
– Increase tax revenues, Raise full retirement age,
Gradually reduce benefits, Diversify social security investment, privatize part of social security.
Increase tax revenues (2)
– Raise tax rate from 6.2% to 7%, Increase salary cap from current $90,000
– Raise to 70. (By 2027 full retirement age = 67 for people after 1995). Current = 62
– But. Increase min. benefit for lower income workers, divorced, or surviving spouses.
Diversify SS investment
– Invest part in private stock and bond market = higher yield than government
– 1-2% managed by workers/board. Production of nest egg for survivors.
– Public Assistance/Welfare (Means/Needs tested)
Public Assistance/Welfare (3)
Supplemental Security Income (SSI)
– Aged, Blind, Disabled. 1
guaranteed min. income program. Used
to supplement SS. Av recipient = $430. state and fed.