American welfare state - AbsoluteAstronomy.com

Social programs in the United States are those institutions, supported or managed by the U.S. government, that aim to ensure economic security, universal access to the resources for self-development and the reduction of social suffering, such as poverty and illness. The main guiding philosophy for the creation of the U.S. welfare state has been modern American liberalism, which holds that positive rights, such as health care and education, are requirements for individual liberty.

History

Unlike in Europe, Christian

Christian Democracy

Christian democracy is a political ideology that seeks to apply Christian principles to public policy. It emerged in nineteenth-century Europe under the influence of conservatism and Catholic social teaching...

and Social democracy

Social democracy

Social democracy is a political ideology of the center-left on the political spectrum. Social democracy is officially a form of evolutionary reformist socialism. It supports class collaboration as the course to achieve socialism...

have not played a major role in shaping welfare policy. Entitlement programs in the U.S. were virtually non-existent until the administration of Franklin Delano Roosevelt and the implementation of the New Deal

New Deal

The New Deal was a series of economic programs implemented in the United States between 1933 and 1936. They were passed by the U.S. Congress during the first term of President Franklin D. Roosevelt. The programs were Roosevelt's responses to the Great Depression, and focused on what historians call...

programs in response to the Great Depression

Great Depression in the United States

The Great Depression began with the Wall Street Crash of October, 1929 and rapidly spread worldwide. The market crash marked the beginning of a decade of high unemployment, poverty, low profits, deflation, plunging farm incomes, and lost opportunities for economic growth and personal advancement...

. Between 1932 and 1975, modern liberalism dominated U.S. economic policy and the entitlements grew along with American middle class wealth.

Programs

Currently total social welfare expenditure constitutes roughly 35% of GDP, with purely public expenditure constituting 21%, publicly supported but privately provided welfare services constituting 10% of GDP and purely privately services constituting 4% of GDP. This compares to France and Sweden whose welfare spending ranges from 30% to 35% of GDP.

The main programs are mandatory and universal primary and secondary education, subsidized college education, unemployment and disability insurance, income subsidies for low wage workers, housing subsidies, food stamps, pensions and health insurance programs that cover public employees. The Social Security system

Social Security Administration

The United States Social Security Administration is an independent agency of the United States federal government that administers Social Security, a social insurance program consisting of retirement, disability, and survivors' benefits...

, is the largest and most prominent entitlement program.

The United States is distinguished from other countries in the developed world for its lack of universal health insurance. Many services provided by the government in most other developed nations, are outsourced to the private sector with the cost borne jointly by employers, employees and government agencies. Critics have charged that this trend burdens American businesses and makes them less competitive, while supporters prioritize lowering the amount of government intervention in the economy.

Although the United States has higher income inequality than many European countries, its welfare programs do not engage in as much income redistribution. In 1998, the United States government's expenditures on subsidies and transfers constituted 11 percent of its GDP, whereas the average government expenditures on subsidies and transfers constituted 19% GDP in countries in the European Union(Alesina, Glaeser, Sacerdote (2000)). Many scholars believe that this is because the United States has a lower level of "reciprocal altruism," and that this is in part a result of its ethnic heterogeneity. A history of perceived high income mobility has promoted a normative belief in American culture that the individual who works hard and perseveres will experience a rise in income, and consequently, economic inequality is often viewed as the just cumulative result of varying degrees of personal responsibility . Some recent studies, however, have shown that income mobility in the U.S. is lower than in Europe today. Asian countries such as Taiwan, Hong Kong, and Singapore have low taxes including a flat income tax; they have low social spending of which very little is categorized as redistribution; all the while income equality is acceptable and income mobility is high.

All Americans are enrolled in the Social Security system, and gain access to public Medicare

Medicare (United States)

Medicare is a social insurance program administered by the United States government, providing health insurance coverage to people who are aged 65 and over; to those who are under 65 and are permanently physically disabled or who have a congenital physical disability; or to those who meet other...

health insurance once they reach the age of 65. Twenty percent receive health coverage through Medicaid

Medicaid

Medicaid is the United States health program for certain people and families with low incomes and resources. It is a means-tested program that is jointly funded by the state and federal governments, and is managed by the states. People served by Medicaid are U.S. citizens or legal permanent...

and about 25% receive wage subsidies through the Earned Income Tax Credit

Earned income tax credit

The United States federal earned income tax credit or earned income credit is a refundable tax credit primarily for individuals and families who have low to moderate earned income. Greater tax credit is given to those who also have qualifying children...

(EITC). Current evidence indicates that the American welfare is successful in reducing poverty, inequality and mortality considerably. Public pensions, for instance, are estimated to keep 40% of American seniors above the poverty line.

The American welfare state was designed to address market shortcomings and do what private enterprises cannot or will not do themselves. Unlike welfare states built on social democracy

Social democracy

foundations it was not designed to promote a redistribution of political power from capital to labor; nor was it designed to mediate class struggle. Income redistribution, through programs such as the EITC, has been defended on the grounds that the market cannot provide goods and services universally, while interventions going beyond transfers are justified by the presence of imperfect information, imperfect competition

Imperfect competition

In economic theory, imperfect competition is the competitive situation in any market where the conditions necessary for perfect competition are not satisfied...

, incomplete markets

Incomplete markets

In economics, incomplete markets refers to markets in which the number of Arrow–Debreu securities is less than the number of states of nature...

, externalities, and the presence of public good

Public good

In economics, a public good is a good that is non-rival and non-excludable. Non-rivalry means that consumption of the good by one individual does not reduce availability of the good for consumption by others; and non-excludability means that no one can be effectively excluded from using the good...

s. The welfare state, whether through charitable redistribution or regulation that favors smaller players, is motivated by reciprocal altruism.

The U.S. government generally refrains from intervention beyond the provision of transfers if markets can produce a given good or service efficiently. There does, however, remain considerable debate on whether the U.S. government is intervening sufficiently to address market shortcomings. Some argue that an expansion of the welfare state is desirable because the market cannot or will not satisfactorily ameliorate unjust economic and social inequality. Others argue that the welfare state has grown too large, and a more laissez-faire form of capitalism is desirable.

Education

Per capita spending on tertiary education is among the highest in the world. Public education is managed by individual states, municipalities and regional school districts. As in all developed countries, primary

Primary education

A primary school is an institution in which children receive the first stage of compulsory education known as primary or elementary education. Primary school is the preferred term in the United Kingdom and many Commonwealth Nations, and in most publications of the United Nations Educational,...

and secondary education

Secondary education

Secondary education is the stage of education following primary education. Secondary education includes the final stage of compulsory education and in many countries it is entirely compulsory. The next stage of education is usually college or university...

is free, universal and mandatory. Parents do have the option of home-schooling their children, though some states, such as California

California

California is a state located on the West Coast of the United States. It is by far the most populous U.S. state, and the third-largest by land area...

(until a 2008 legal ruling overturned this requirement), require parents to obtain teaching credentials before doing so. Experimental programs give lower-income parents the option of using government issued vouchers to send their kids to private rather than public schools in some states/regions.

As of 2007, more than 80% of all primary and secondary students were enrolled in public schools, including 75% of those from households with incomes

Income in the United States

Income in the United States is measured by the United States Department of Commerce either by household or individual. The differences between household and personal income is considerable since 42% of households, the majority of those in the top two quintiles with incomes exceeding $57,658, now...

in the top 5%

Affluence in the United States

Affluence in the United States refers to an individual's or household's state of being in an economically favorable position in contrast to a given reference group...

. Public schools commonly offer after-school programs and the government subsidizes private after school programs, such as the Boys & Girls Club. While pre-school education is subsidized as well, through programs such as Head Start, many Americans still find themselves unable to take advantage of them. Some education critics have therefore proposed creating a comprehensive transfer system to make pre-school education universal, pointing out that the financial returns alone would compensate for the cost.

Tertiary education is not free, but is subsidized by individual states and the federal government. Students may attend public institutions or private institutions. Some of the costs at public institutions is carried by the state.

The government also provides grants, scholarships and subsidized loans to most students. Those who do not qualify for any type of aid, can obtain a government guaranteed loan and tuition can often be deducted from the federal income tax

Income tax in the United States

In the United States, a tax is imposed on income by the Federal, most states, and many local governments. The income tax is determined by applying a tax rate, which may increase as income increases, to taxable income as defined. Individuals and corporations are directly taxable, and estates and...

. Despite subsidized attendance cost at public institutions and tax deductions, however, tuition costs have risen at three times the rate of median household income

Median household income

The median household income is commonly used to generate data about geographic areas and divides households into two equal segments with the first half of households earning less than the median household income and the other half earning more...

since 1982. In fear that many future Americans might be excluded from tertiary education, progressive Democrats have proposed increasing financial aid and subsidizing an increased share of attendance costs. Some Democratic politicians and political groups have also proposed to make public tertiary education free of charge, i.e. subsidizing 100% of attendance cost.

History

Programs

Education

See also