L9 Sept 29

L9 Sept 29 - Government Assistance 1 Changing economy and...

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Unformatted text preview: Government Assistance 1 Changing economy and needs • starting in the 1880s – Move from agrarian to industrial economy – Move from rural to urban society – Less reliance on extended families – Increase in average life span 2 Social Security Act • Marked the beginning of large-scale public assistance • Great Depression leads to calls for radical change • F. Roosevelt’s proposal – social insurance (not welfare assistance) for the elderly, unemployed, and widows – Speech 3 Roosevelt’s speech signing SSA Aug 14, 1935 • “50 millions of our citizens … (pop = 127 million) – unemployment compensation, – old-age pensions, – increased services for the protection of children and the prevention of ill health” “some measure of protection to the average citizen and to his family against the loss of a job and against poverty- stricken old age” 4 Roosevelt’s speech signing SSA Aug 14, 1935 • Cornerstone of protection, but not complete • “act as a protection to future administrations against the necessity of going deeply into debt to furnish relief to the needy” • “take care of human needs and at the same time provide the United States an economic structure of vastly greater soundness” 5 Roosevelt’s speech signing SSA Aug 14, 1935 • Highlights safety net as a tool – to increase economic security, help economic growth – Reduce future public expenditures • But notes that it is only the beginning of what is needed 6 Social Insurance Programs • Structure – Near universal coverage and uniform in rules and benefits – Overcomes adverse selection problem in private insurance through mandatory pooling – Dedicated funding mechanisms market • Tend to be more politically popular – Receipt depends on past work experience – Not at odds with social norms of personal responsibility – Triggered by events that are salient to most Americans (retirement, unemployment, disability) – Decrease caregiving responsibilities of adult children 7 Overview of social insurance programs • Elderly – Social Security – Medicare • Working-age adults – Unemployment insurance – Worker’s compensation – Disability insurance 8 Social Insurance: Elderly • Social Security (Old Age, Survivors, & Disability Insurance) – Benefit: Monthly cash stipend – Target Pop.: Elderly (62 and over) and survivors • Medicare – Benefit: In-kind health insurance & prescription drug coverage – Target Pop.: Elderly and disabled 9 Social Insurance: Prime-Age Workers...
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This note was uploaded on 09/07/2011 for the course ECON 375 taught by Professor Staff during the Fall '10 term at Maryland.

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L9 Sept 29 - Government Assistance 1 Changing economy and...

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