Monday, August 20, 2007

On Welfare

In the comments thread to Larry’s post “On Wealth,” valued commenter DBB describes welfare as “When I talk about dependency, I mean dependency on getting money for basically doing nothing but sitting on your ass. That's welfare. He goes on to state that “If you really insist on giving money to everyone via taxing and redistributing it, at least make the recipients earn it... why not make welfare require you to do a job - and train you to do it if you don't know how - then from there, you can take that experience and get a better job, or stay on "welfare" ...

One of the biggest problems in talking about welfare, entitlements, and a welfare state, is the general ignorance among both conservatives and liberals about what actually constitutes public welfare. As some readers may be aware, I am a social worker; in previous years, our graduate focus was described as a master’s of social welfare (the research track post-graduate degree is still referred to thusly). Both educationally and professionally, I have had to learn a great deal about how welfare works in this country. (Full disclosure: the agency I work for is provided as an entitlement to California’s developmentally disabled population and is funded solely by public funds.)

The best way to describe welfare is “public expenditures for public good.” Tax moneys are collected and redistributed. For example, the state of Texas, via water-redistribution contracts with neighboring states (New Mexico, for example, sends far more water than it can afford to its neighbor), reserves far, far more public welfare than one might view at first glance. Roads, public parks, public safety departments, these are all welfare. We are, every last one of us, a welfare queen.

When DBB refers to “taxing” and “redistributing,” he is referring to so-called income transfer welfare, which conjures the erroneous picture of lazy black women sitting on front stoops squatting out children in order to stay on the dole. His colorful description of anti-poverty programs bears very little resemblance to reality. Most people opposed to social welfare hold that opinion on one of two grounds: either “redistribution” is unfair or that it creates dependency on federal and state handouts.

Nothing could be further from the truth in either respect. Throughout the history of anti-poverty measures put in place by the federal government (Johnson’s War on Poverty, for example), the average duration of a stay on Aid to Families with Dependent Children (AFDC) was about five to seven years, with only some five percent of recipients cyclically returning. Before Johnson’s War on Poverty, federal anti-poverty measures were targeted at war widows with children.

In 1975, the Earned Income Tax Credit came into being; Ronald Reagan would later refer to it during his administration as "the best anti-poverty, the best pro-family, the best job creation measure to come out of Congress." During the Clinton Administration, the Republican Congress passed the Welfare Reform Act of 1996, which Clinton signed into law. As part of that law, AFDC became Temporary Assistance to Needy Families, setting a cap of five years over one’s lifetime that they may receive TANF; in addition, one could claim no more than three children for benefits while on TANF. TANF additionally requires that one be actively attending work-education classes and be seeking a job or working at one. The Republicans shortened the time limits Clinton wanted, as well as eliminating childcare subsidies. They would later relent and increase the asset-possession limit to allow for recipients to own a cheap car in order to get to work (which was nice, since they didn’t include transportation benefits to go along with the work requirement). TANF works exactly as DBB wants welfare to work.

Most liberals (and conservatives) are not aware that the nation’s largest welfare program is not TANF, but the Earned Income Tax Credit, which was expanded during the 1996 Welfare Reform Act. EITC is a refundable tax credit based on a percentage of one’s income, which has the effect of making low-paying jobs pay more, and therefore be more attractive to people “on the dole,” moving them out of poverty (and into “near-poverty,” which is a whole ‘nother post). And, indeed, the last thirty-two years have shown that the EITC increases employment, decreases welfare receipts, and lowers poverty.

The only welfare programs that allow for “sitting on one’s ass” are disability-related. Worker’s compensation and short-term disability (SSDI) are typically due to injuries received on the job. SSI is for long-term disability, either through traumatic injury, debilitative disease, or developmental disability (autism, mental retardation, cerebral palsy, etc…). Both programs require continual (typically annually, sometimes earlier) verifications of eligibility.

America largely has three broad classes: the poor, who receive TANF or the EITC, the middle class, who pay the payroll tax and are not eligible for most tax-credits, and the affluent, who pay payroll and income tax but receive all the tax-credits (and also typically receive huge breaks on investment income). If one wishes to discuss “fairness,” it should be to ask how 60% of working Americans are not eligible for tax credits, including mortgage deductions and the child tax credit – because they pay no income tax (no income tax liability, no credit). This is why payroll taxes now make up 40% of federal revenues.

My favorite definition of “fairness” comes from an instructional video on teaching learning-disabled children called “The F.A.T. Method.” In it, the instructor states that “fairness isn’t about an equal share; it’s about everyone getting what they need.” Fairness relates directly back to Larry’s earlier question about whether or not it is immoral to enjoy luxury while others languish in poverty. I answered “no” because inherent inequality isn’t necessarily a bad thing: what is immoral is having the ability to provide for everyone’s basic needs – adequate shelter, nutrition, health care, and education – when such can be done without appreciable cost to anyone’s current standard of living.

We all receive welfare in one form or another: We drive on public roads and freeways which also serve as vital service delivery and economic arteries; we take our children, dogs, and spouses to the park; we use water to keep our lawns green, eat the food it grows, and to stay healthy; we call the police when we feel unsafe, are taken to the hospital by ambulances when we injure ourselves, and call upon fire departments in emergencies; public health and vector control departments protect us from outbreaks of diseases. Every last one of us receives public welfare. We live in a welfare state for a very, very good reason: if we did not, we would find our lives grinding to a halt as we struggled to meet necessities we take for granted.


6 comments:

  1. I think this is a very good post.

    I reside in Australia, but in the essentials all you say applies here. Your definition of welfare is very acceptable to me.

    I hope it may make some readers rethink their conception.

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  2. I agree that the payroll taxes are the worst regressive taxes we have - I'd eliminate them in their entirety and fund all of those programs (that still needed funding) out of the general fund. It is just psychotic that we even have them in what is supposed to be a progressive tax system.

    I also agree that much of what you describe is a good thing, but I would not call any of it welfare - to me, welfare is paying someone for not working, or paying someone for not producing (and thus I despise all the corporate welfare that is out there as well).

    I would probably classify paying someone who just has to keep "seeking a job" as welfare - unless they were on unemployment, so just temporarily between jobs. Because one can pretty easily pretend to be looking while sitting on your ass. I have only indirect experience with welfare - but perhaps it is now outdated. I worked with a wonderful woman who grew up in some very poor neighborhoods and still lived in them when she was working as a computer programmer. She owned some property in them as well and rented to various people who lived there. She had all sorts of stories about the people in her neighborhood. Many of them just sat around and collected checks from the government as they had lots of kids. They called my friend a "sucker" and various other things for actually going out and working and making a living when, according to them, she could have just sat on her ass and collected a check.

    Now, perahps things are different now than when they were when that was happening, but that is what I'm talking about when I talk about welfare. If such a thing no longer exists in any of the states or from the feds, great - but there are likely some who advocate bringing it back. And I oppose that.

    I don't see public roads and such as welfare - those are roads paid for with public money to be used by the public - and everyone can use them. That's not welfare, that's paying for what you get.

    Personally, I think the best way to not need something like welfare (which really wouldn't work anyway - again, I mean welfare as shorthand for "paying someone who isn't working") is to legislate a living wage as a minimum wage, indexed to inflation each year. Then people can pay for themselves rather than having to go ask a bureaucrat. And employers would no longer be able to profit by paying a less than living wage, letting the rest of us pick up the tab for the lack of healthcare and the lack of a living wage paid to their employees with tax dollars - essentially we subsidize such employers profits with tax money.

    Maybe I'm deluded, but I think the best, most qualified person to determine what money to spend where for that person is that person, not the government, not some bureaucrat.

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  3. DBB: Oh good grief.

    [T]o me, welfare is paying someone for not working, or paying someone for not producing.

    Who are you, Humpty Dumpty?

    As James has just pointed out, the only programs that fit this definition are for people who cannot work or be productive, i.e. SSDI and SSI; AFDC and TANF exist (in theory) so people can become productive. So what's your beef?

    She had all sorts of stories about the people in her neighborhood. Many of them just sat around and collected checks from the government as they had lots of kids.

    You heard, huh? Friends of friends? Jumping Jesus on a pogo stick: You're a lawyer, man. Do you think the rules of evidence are a quaint courtroom tradition like wigs and robes? Or do you think just maybe they might have some applicability to knowledge outside the courtroom?

    I think the best way to not need something like welfare... is to legislate a living wage as a minimum wage, indexed to inflation each year.

    ..but...

    I think the best, most qualified person to determine what money to spend where for that person is that person, not the government, not some bureaucrat.

    Not only are you deluded, but you're contradicting yourself.

    And yes, you are deluded. Who do you think determines what and how to spend money on the stuff you do approve of, such as infrastructure?

    Worse yet, if you're a practicing lawyer, you yourself are a bureaucrat, spending your life making bureaucratic decisions in a bureaucratic process. What do you think the entire court system, civil and criminal is if not a bureaucracy?

    I'm being tough on you but only because I think you're worth it.

    Take off your ideological blinders and look at the big picture.

    ReplyDelete
  4. First, I'm not saying my anectodal exposure to welfare is definitive evidence on the matter - it was simply my only personal exposure, through my friend, to welfare. Given her age, it is likely that much of that has changed, even if true, given the changes under Clinton mentioned earlier.

    But I do want to say that my friend was talking about her direct experiences, and I had no reason to think she was lying.

    As for who decides what to spend money on, well, that would be the people in power in any given jurisdiction, but probably mostly the federal government, that supplies the money to most jurisdictions for major projects such as roads. The feds control most everything through the purse strings.

    Heck, I worked on the child support system in Michigan that dealt out the TANF - Michigan was frantically trying to jump through all sorts of hoops so they could keep federal money coming in. So for many things, even local things, the ultimate "decider" is some bureaucrat in Washington. A whole gaggle of them kept coming out here to judge whether Michigan had jumped through all the right hoops to keep getting money or not. Had I been someone who actually was inclined to wear a suit to work (I avoid suits like the plague) I would have had the opportunity to meet these bureaucrats, along with the governer of Michigan and at least one Michigan Supreme Court Justice on one of those many visits.

    I make a distinction between bureaucracy and the courts - bureaucrats have more everyday power - they can often make decisions on the spot for dozens of different people in real time. Courts may have more ultimate power, but they are SLOW. The courts are where you go when you can't get what you want through the bureaucracy - we are the end game.

    Plus, lawyers don't get to decide anything - they just argue on behalf of others. Then a jury decides. (Though usually it doesn't get that far - 97% of cases settle).

    Advocating a minimum wage and then saying people should decide for themselves about how to spend money isn't a condtradiction - giving them the living wage is what gives them the money to decide to spend with - or are you talking about from the employer's perspective?

    What I am not getting is, what exactly is the system you are advocating here? If you were made supreme dictator of the United States, what would you implement, what would you do the same, what would you do different, to deal with poverty and wealth inequities, if anything?

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  5. James, great post, thanks. Very informative. I knew some of this, and I learned in my very first year in the US, through a non-profit job that catered to single mothers and their children, that what little assistance they get from the government is pitiful and not worth sitting on your ass for. But it is very helpful to see the system and its history so succinctly explained.

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  6. I recommend picking up a copy of "American Dreams" by New York Times social policy beat reporter Jason DeParle about the Welfare Reform Act of 1996. It tracks the history of the legislation as well as three cousins' (single mothers) attempts to get off welfare. It's an excellent read that challenges one's thinking about poverty and welfare no matter where one's ideology stands.

    DBB, you call public welfare "just getting what you pay into it," but isn't that the point? Aren't all of our lives improved by poverty reduction? Whether one lives rurally or in an urban center, poverty is a reality we come up against, if not on the level of going to visit Chiang Mai or somewhere else where real poverty exists.

    You stated, "to me, welfare is paying someone for not working." I hope I've demonstrated that this is manifestly what doesn't occur in most parts. As with any financial system, there will be scallywags and rogues who game the system. But it's not that easy.

    Poverty has concomitant effects that affect us all: children raised in poverty are more likely to raise their own children in poverty; those in poverty are more likely to go to jail; they are more likely to have health problems that require emergency treatment; and children raised in poverty experience more child abuse and require more special education services. Poverty reduction spending is socially preventative spending. It's prophalactic. Think of it medically: we're always told to seek preventative health care in order to avoid needing to spend on more dramatic services. By spending on poverty reduction programs, we will eventually require less investment in other public "triage" type services.

    It's just good business.

    As for who decides what to spend money on...

    U.S. government follows a redistributive course. The Feds put in place certain programs, for which the states can receive reimbursement for certain expenses if they participate (one such example is No Child Left Behind). States do not have to accept federal dollars for these programs, and sometimes choose not to do so. Similarly, local entities, such as school boards, can choose not to comply and decline to receive their portion of the federal dollars (or state dollars). Most counties get the bulk of their money from the state, as do many cities and towns.

    I think you would be very interested in an article by Robert Rauch in the latest American Prospect where he argues for extending income tax credits to the payroll tax.

    ReplyDelete

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